Ajax Predicts That If a Customer Pays on the First

question 80

Multiple Choice

Ajax predicts that if a customer pays on the first sale, it is assured that it is a reliable customer.As such, it expects that customer to generate a net profit of $350 per year for 12 years.Ajax calculates present value with a 15% rate of return.There is a 90% probability that Ajax will secure a reliable customer.However, if the customer defaults, Ajax will have to incur a loss of $500.Determine the expected benefit if credit is granted.

• A)$1,657
• B)$1,757
• C)$1,857
• D)$1,957

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Definitions:

Horizontal Communication

Information exchange between individuals or departments at the same level within an organization, aimed at coordinating tasks and activities.

Policy Decision

A choice made by a governing body or organization that sets a direction or action based on certain principles or objectives.

Retaliate

To respond to a wrong or injury with a similar action, often with the intent to harm or get even.

Job Performance

The extent to which an employee fulfills their job duties and responsibilities effectively.