A Customer Has Ordered Goods Generating a Present Value of $2,000

question 55

Multiple Choice

A customer has ordered goods generating a present value of $2,000. The present value of production costs is $1,800. Under what conditions should you extend credit if there is no possibility of repeat orders?

• A)If the probability of payment exceeds 0.67
• B)If the probability of payment exceeds 0.75
• C)If the probability of payment exceeds 0.80
• D)If the probability of payment exceeds 0.90

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Definitions:

Trobriand Islands

A group of islands in the Solomon Sea, part of Papua New Guinea, known for their unique matrilineal culture and kula exchange system.

Hawaii

An archipelago and state of the United States located in the Central Pacific Ocean, known for its diverse natural scenery, warm tropical climate, and unique cultural heritage.

Barkcloth Production

The process of making a non-woven fabric from the inner bark of certain trees, traditionally used in many cultures for garments and decorations.

Decorated Ngatu

A type of barkcloth from Tonga, decorated with traditional designs and used for ceremonial purposes.