What Credit Decision Is Appropriate for a Potential Customer That

question 107

Multiple Choice

What credit decision is appropriate for a potential customer that offers an 80% chance of paying on a $10,000 (present value) sale that has an 80% (present value) cost?

• A) Grant credit since expected profit is $3,200.
• B) Grant credit since expected profit is $800.
• C) Refuse credit since expected profit is zero.
• D) Refuse credit since expected loss is $3,000.

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Definitions:

Rhonchi

Low-pitched, rattling lung sounds that suggest blockage or secretion in the large airways.

Auscultating

The act of listening to the sounds made by internal organs, especially the lungs and heart, typically with a stethoscope, as part of a medical examination.

Pneumonia

An inflammatory condition of the lung, often caused by infection, that leads to alveolar filling with fluid or pus.

Turgor

The pressure of fluid within a cell that contributes to its rigidity, often used as an indicator of hydration.