Saxon Corporation Sells a Product for $48 with Costs of $33

question 77

Multiple Choice

Saxon Corporation sells a product for $48 with costs of $33 per unit.Saxon uses a 9% rate of return for all its calculations.The CFO estimates that there is a 20% probability of a prospective new customers seeking credit will go bankrupt within the next 6 months.Customer wishes to place an order for 1,000 units of the product.

• A)Extend credit; total benefit of $3,780
• B)Extend credit; total benefit of $3,880
• C)Extend credit; total benefit of $3,980
• D)Extend credit; total benefit of $4,080

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