What Is the Break-Even Probability of Collection When the Present

question 48

Multiple Choice

What is the break-even probability of collection when the present value of revenues from a sale is $100,000 and the present value of cost is $87,000?

• A) 1.00
• B) 0.87
• C) 0.74
• D) 0.13

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Definitions:

Liability

The condition of being legally accountable for certain actions or responsibilities, particularly regarding financial debts or legal duties.

Replacement Value

The cost to replace an asset or property with a new one of similar kind and quality at current market prices.

Stated Value

The value of an asset as declared by its owner, often for insurance purposes, which may or may not reflect its actual market value.

Homeowner's Insurance

A type of property insurance that covers damages and losses to an individual's house and assets in the home, providing liability coverage against accidents in the home or on the property.