Price Corp

question 102

Multiple Choice

Price Corp. is considering selling to a group of new customers and creating new annual sales of $90,000. 5% will be uncollectible. The collection cost on these accounts is 3% of new sales, the cost of producing and selling is 80% of sales and the firm is in the 30% tax bracket. What is the profit on new sales?

• A) $7,560
• B) $9,660
• C) $7,245
• D) none of these.

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Definitions:

Real Number Line

A line that represents all possible real numbers in a continuous sequence, with positive numbers to the right of zero and negative numbers to the left.

Inequality

A mathematical statement that compares two expressions using symbols to indicate that one is larger, smaller, or different from the other.

Compounded Annually

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, applied once per year.

Interest Rate

The rate at which interest is applied to a borrowed sum, usually shown as an annual percentage of the remaining loan amount.