When Analyzing the Decision to Change the Cash Discount Policy,the

question 10

Multiple Choice

When analyzing the decision to change the cash discount policy,the firm should:

• A) choose the policy with the highest order size.
• B) choose the policy with the lowest variable cost.
• C) choose the policy with the lowest NPV.
• D) choose the policy with the highest NPV.
• E) choose the policy offering the lowest cash discount.

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Definitions:

Asset

Something that is owned by or owed to an individual or a business firm.

Medium of Exchange

An item that is widely accepted in exchange for goods and services, facilitating trade by eliminating the need for a coincidence of wants.

Federal Deposit Insurance Corporation

Insures bank deposits up to $100,000.

Automated Teller Machines

Electronic banking outlets that allow customers to complete basic transactions without the need for a branch representative or teller.