Neilson's Is a New Firm That Sells a Product with a Variable

question 26

Multiple Choice

Neilson's is a new firm that sells a product with a variable cost of $62 a unit.The firm has a monthly required return of 1.8 percent.The firm wants to offer all new customers 30 days of credit and expects that if it does so,that 12 percent will default on payment while the others become repeat customers.What is the minimum price the firm could charge to break-even on an NPV basis?

• A)$82.15
• B)$74.09
• C)$63.27
• D)$98.14
• E)$78.40

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Definitions:

Impasse

An impasse is a situation in which one or both parties believe that reaching an agreement is not imminent.

Negative Settlement Zone

Negative Settlement Zone refers to a situation in negotiation where the interests of the parties involved do not overlap, making it hard to find a satisfactory agreement for both.

Negotiation Process

A series of discussions and compromises between two or more parties to reach a mutually acceptable agreement.

Bargaining Zone

The range or area within which an agreement is satisfactory to both parties involved in negotiation, typically between employer and employee or buyer and seller.