If the Probability of Collection Is 65%,should You Grant Credit

question 71

Multiple Choice

If the probability of collection is 65%,should you grant credit to a customer wishing to purchase a $2,000 item that cost $1,333.33 to produce? Assume all cash flows are discounted to present value and there is no chance of subsequent sales.

• A) No; the expected loss is $33.33.
• B) No; the expected loss is $150.00.
• C) Yes; the expected profit is $33.33.
• D) Yes; the expected profit is $150.00.

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Definitions:

Trespass To Land

An infringement on a person's property without permission, violating their legal right to exclusive use and enjoyment.

Thick Smoke

Densely concentrated smoke, often indicating a large fire or heavy burning.

Invasion Of Privacy

The infringement upon an individual’s personal life or space without consent, which can include actions such as stalking, unauthorized surveillance, or revealing personal information without permission.

Distinct Torts

Refers to unique or separate wrongful acts that lead to legal liability apart from contractual obligations.