You Are Considering Renting a Kiosk in the Local Mall

question 96

Multiple Choice

You are considering renting a kiosk in the local mall for a period of three months.Any sale you make will be a one-time sale.There is only a 79 percent chance you will collect payment on a credit sale.The product you want to sell has a variable cost of $3.88 and a sales price of $4.99.The monthly interest rate is 1.5 percent.Should you offer people 30 days to pay? Why or why not?

• A)yes; because the NPV of a credit sale is $0.09.
• B)yes; because the NPV of a credit sale is $0.03.
• C)no; because the NPV of a credit sale is -$0.08.
• D)no; because the NPV of a credit sale is -$0.02.
• E)It doesn't matter because the NPV of a credit sale is approximately zero.

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Definitions:

Basidiomycete

Member of a phylum of fungi characterized by the production of sexual basidiospores.

Zygote Germination

The process by which a zygote begins to grow and develop into a new organism, typically after a period of dormancy in plants.

Meiosis

A type of cell division that reduces the chromosome number by half, resulting in the production of gametes or spores.

Zoosporangium

A structure in fungi and some algae that produces zoospores, which are a type of motile spore.