Jomal Corporation Expects to Receive $2,300 Along with Costs of $1,800

question 97

Multiple Choice

Jomal Corporation expects to receive $2,300 along with costs of $1,800 on each non-delinquent sale on credit.The probability of collection is 85%.Determine whether credit should be extended.

• A)Extend credit - net benefit of $155
• B)Extend credit - net benefit of $80
• C)Do not extend credit - net detriment of $155
• D)Do not extend credit - net detriment of $80 p x PV(REV - COST) - (1-p) x PV(COST)