Xian Corporation Predicts That If a Customer Pays on the First

question 27

Multiple Choice

Xian Corporation 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 $700 per year for 10 years.Ajax calculates present value with a 9% rate of return.There is a 70% probability that Ajax will secure a reliable customer.However, if the customer defaults, Ajax will have to incur a loss of $800.Determine the expected benefit if credit is granted.

• A)$2,804
• B)$2,904
• C)$3,004
• D)$3,104

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Definitions:

Equality

The state, quality, or ideal of being equal, especially in status, rights, and opportunities.

Fairness

The quality of making judgments that are free from discrimination or bias, ensuring equal treatment for all.

Defining Justice

The act of determining what is morally right, fair, and equitable within a society, often involving the application of laws and ethical principles.

Basic Benefit

Fundamental or essential advantages provided typically by governments or organizations, such as health care or social security.