What Is the Minimum Probability of Collection That Should Be

question 36

Multiple Choice

What is the minimum probability of collection that should be accepted by firms that have a 25% profit margin? Ignore the time value of money.

• A)20%
• B)25%
• C)50%
• D)75% break-even probability of collection = .25% - .75(1 - x%)
• = )25% - .75 + .75x% = 0

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Definitions:

Quality

The measure of how a product or service either meets or surpasses the anticipations of customers.

Geographical Adjustments

Modifications or changes made to strategies or operations based on geographic locations or conditions.

FOB Origin Pricing

A pricing term indicating that the buyer takes responsibility for the goods and shipping costs from the seller's location, bearing all risks.

Spider Web Pricing

A pricing strategy that involves setting a low price for one product to attract customers and then raising prices once the customer engagement has been established.