A Business Received an Offer from an Exporter for 20,000

question 54

Multiple Choice

A business received an offer from an exporter for 20,000 units of product at $15 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: What is the differential revenue from the acceptance of the offer?

• A) $300,000
• B) $420,000
• C) $120,000
• D) $240,000

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Definitions:

Single Digit Returns

Single digit returns refer to the percentage gain or loss on an investment that is less than ten percent, indicating a low to moderate performance.

Liquidity

The ability of an asset to be quickly converted into cash without significantly affecting its price.

Default Risk

The possibility that a borrower will fail to meet the obligations of a loan agreement.

Interest Rate Risk Premiums

Additional returns demanded by investors to compensate for the risk of fluctuating interest rates.