Precor Sells Exercise Equipment to Thousands of Health Clubs and Sporting

question 5

Multiple Choice

Precor sells exercise equipment to thousands of health clubs and sporting goods stores around the world.Its average order size is about $3,500.Which of the following techniques would you recommend to Precor to deal with its credit risk?

• A)insure the receivables through the FCIA,which will charge a 1.2% fee to cover 90% of the receivables
• B)use a factor,who will charge a 1.3% export factoring fee
• C)request letters of credit from customers.The customers will have to pay $75 plus 0.5% for each letter of credit.To remain competitive,Precor will have to reduce its prices to reimburse customers for their L/C costs
• D)all are about equally acceptable

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Definitions:

White Spot

A descriptive term that can refer to a localized area of lighter pigmentation on the skin, or can be used in various contexts to indicate an anomaly or specific feature.

Perceptual Organization

The process by which the human brain interprets and organizes sensory information to form a coherent, unified view of the environment.

Gestaltists

Psychologists who emphasize holistic processing and perceive psychological phenomena as organized, structured wholes.

Proximity

The physical closeness or distance of objects, which influences how people perceive and group elements in their environment.