You Are Trying to Attract New Customers That You Feel

question 6

Multiple Choice

You are trying to attract new customers that you feel could become repeat customers.The average price of your product is $619 per unit with a $435 variable cost per unit.The monthly interest rate is 1.8 percent.Your experience tells you that 9 percent of these customers will never pay their bill.Should you offer credit terms of net 30 to attract these potential customers? Why or why not?

• A)yes; because the NPV of extending credit is $8,867
• B)yes; because the NPV of extending credit is $9,787
• C)yes; because the NPV of extending credit is $128
• D)no; because the NPV of extending credit is -$459
• E)It doesn't matter because the NPV of extending credit is zero.

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Definitions:

Late Adulthood

The stage of life typically associated with old age, often considered to start around the age of 65 and characterized by changes in health, physical abilities, and social roles.

Vitality

The state of being strong, active, and full of energy; often considered essential for a healthy and fulfilling life.

Rampant Diseases

Illnesses that are widespread and out of control within a population.

Life-Expectancy Rates

Statistical measures of the average time an organism is expected to live, based on the year of their birth, current age, and other demographic factors.