You Are Trying to Attract New Customers That You Feel

question 6

Multiple Choice

You are trying to attract new customers that you feel could become repeat customers.The average price of your product is $619 per unit with a $435 variable cost per unit.The monthly interest rate is 1.8 percent.Your experience tells you that 9 percent of these customers will never pay their bill.Should you offer credit terms of net 30 to attract these potential customers? Why or why not?

• A)yes; because the NPV of extending credit is $8,867
• B)yes; because the NPV of extending credit is $9,787
• C)yes; because the NPV of extending credit is $128
• D)no; because the NPV of extending credit is -$459
• E)It doesn't matter because the NPV of extending credit is zero.

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Definitions:

Shahada

The Islamic declaration of faith, stating belief in the oneness of God and Muhammad as God's prophet, a central pillar of Islam.

Haj

An Islamic pilgrimage to Mecca that is required once in a lifetime for all Muslims who are physically and financially able to undertake the journey.

Arab Immigration

The process by which individuals from Arab countries move to live permanently in another country.

Palestinians

People originally from the historical Palestine region, who may live in the West Bank, Gaza Strip, Israel, or as part of a global diaspora.