An Entrepreneur Who Is Considering Purchasing a Business Is Analyzing

question 16

Multiple Choice

An entrepreneur who is considering purchasing a business is analyzing a company's accounts receivable. The following table summarizes her findings. Age of Accounts Amount Probability of Collection
0 - 30 days $12,000 .96
31 - 60 days $ 4,000 .87
61 - 90 days $ 2,500 .71
91 - 120 days $ 1,400 .65
121⁺ days $ 800 .24
How much should this potential buyer be willing to pay for these accounts receivable?

• A)Nothing; a buyer should never purchase existing accounts receivable.
• B)$20,700
• C)$17,877
• D)Not enough information given to determine

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Definitions:

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