Your Company Is Considering Granting Credit to a New Customer

question 89

Multiple Choice

Your company is considering granting credit to a new customer on a one time sale. The price per unit is $225 and the variable cost per unit is $175. The chance of default is 20% and the monthly
Interest rate is 1%. The customer will pay in 30 days if they do not default. What is the NPV of
Granting credit?

• A) $1.38
• B) $3.22
• C) $4.32
• D) $5.50
• E) $6.00

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Definitions:

Intrarole Conflicts

Occurs when there are contradictory expectations associated with the same role, leading to stress and confusion.

Functional Turnovers

Turnovers that positively affect the organization by replacing less effective employees with more productive ones.

Type A Behavior

A personality trait characterized by competitiveness, impatience, aggressiveness, and a constant sense of urgency, often linked to stress and heart disease.

Behavior Pattern

Regularly occurring actions or reactions that characterize an individual's or group's behavior over time.