Assume a Sales Price of $119 Per Unit, a $76

question 20

Multiple Choice

Assume a sales price of $119 per unit, a $76 per unit variable cost, an average default rate of 3 percent, and a monthly interest rate of 1.25 percent. What is the net present value of a new repeat customer who never defaults on his or her payment?

• A) $5,733
• B) $3,364
• C) $2,617
• D) $8,817
• E) $9,520

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Definitions:

Secondary Promise

A guarantee or promise that is auxiliary or supplementary to a primary promise in a contractual agreement.

Primary Promise

A fundamental obligation in a contract that is central to the agreement's purpose.

Admission Exception

A legal principle allowing statements by a party to be used as evidence against them, typically in a court of law.

Statute of Fraids

Likely intended to refer to the "Statute of Frauds," which is a legal concept requiring certain types of contracts to be in writing to be enforceable.