You Can Make a One-Time Sale If You Will Grant

question 57

Multiple Choice

You can make a one-time sale if you will grant a new customer 30 days to pay.  This customer wants to purchase an item with a sales price of $499 and a variable cost of $287. You estimate the probability of default at 33 percent. The monthly interest rate is .98 percent. Should you grant credit to this customer? Why or why not?

• A) Yes; because the NPV of the potential sale is $33.05
• B) Yes; because the NPV of the potential sale is $44.09
• C) Yes; because the NPV of the potential sale is $13.02
• D) No; because the NPV of the potential sale is −$13.05
• E) No; because the NPV of the potential sale is −$2.65

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Definitions:

Euthanasia

The practice of intentionally ending a life to relieve pain and suffering, often in the context of terminal illness.

Slippery Slope

A logical fallacy or argument that suggests a small action will lead to a chain of events resulting in a significant and often negative outcome.

Grief

The deep sorrow that people feel at the death of another. Grief is personal and unpredictable.

Odd Actions

Behaviors or actions that deviate from what is typically expected or considered normal in a given context.