What Credit Decision Is Appropriate for a Potential Customer That

question 59

Multiple Choice

What credit decision is appropriate for a potential customer that offers a 75% chance of paying on a $10,000 sale which has an 80% cost?

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

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Definitions:

MAN

Metropolitan Area Network; a network that interconnects users with computer resources in a geographic area or region larger than that covered by a large local area network (LAN) but smaller than the area covered by a wide area network (WAN).

LAN

Local Area Network, a network that connects computers within a limited area like a home, school, or office building.

MAN

Metropolitan Area Network, a network that interconnects users with computer resources in a geographic area larger than that covered by a LAN but smaller than a WAN.

WAN

Stands for Wide Area Network, a telecommunications network that extends over a large geographic area for the primary purpose of computer networking.