What Credit Decision Is Appropriate for a Potential Customer That

question 107

Multiple Choice

What credit decision is appropriate for a potential customer that offers an 80% chance of paying on a $10,000 (present value) sale that has an 80% (present value) cost?

• A) Grant credit since expected profit is $3,200.
• B) Grant credit since expected profit is $800.
• C) Refuse credit since expected profit is zero.
• D) Refuse credit since expected loss is $3,000.

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Definitions:

Foursquare

A local search-and-discovery service mobile app which provides search results for its users.

Swarm

A large group of insects or other small organisms moving together, or metaphorically, a group of individuals focusing intensely on a particular activity or goal.

Location-Based Service

A social, entertainment, or information service that allows a company to reach and engage with its audience using tools and platforms that capture the geographic location of the audience.

Geographic Location

The specific physical position of a place, object, or person, often determined by coordinates such as latitude and longitude.