If a Firm Refuses to Offer Credit, the Net Present

question 21

Multiple Choice

If a firm refuses to offer credit, the net present value of the transaction is:

• A)the cash revenues received minus the cost paid in time period 0.
• B)the discounted value of the revenues from time period 0.
• C)the net cash flow from the future payments to be received.
• D)determined by all of the above.
• E)always equal to zero.

---

Definitions:

Actual Hours

The real number of hours worked or spent on a specific task, project, or production process.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity expected, multiplied by the standard cost per unit.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the product’s cost.

Direct Labour

The wages of workers or employees who are directly involved in the production of goods or the delivery of services.