An Entrepreneur Who Is Considering Purchasing a Business Is Analyzing

question 16

Multiple Choice

An entrepreneur who is considering purchasing a business is analyzing a company's accounts receivable. The following table summarizes her findings. Age of Accounts Amount Probability of Collection
0 - 30 days $12,000 .96
31 - 60 days $ 4,000 .87
61 - 90 days $ 2,500 .71
91 - 120 days $ 1,400 .65
121⁺ days $ 800 .24
How much should this potential buyer be willing to pay for these accounts receivable?

• A)Nothing; a buyer should never purchase existing accounts receivable.
• B)$20,700
• C)$17,877
• D)Not enough information given to determine

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Definitions:

Power Holder

An individual or entity that possesses control or authority over others within an organizational or societal context.

Exchange Relationship

A connection between people or organizations characterized by the mutual giving and receiving of resources or services.

Machiavellian Values

Traits characterized by cunning, stratagem, and a pragmatic, often unscrupulous approach to achieving personal or organizational goals.

Political Tactics

Strategies and maneuvers used within an organization to gain power, influence decisions, and achieve objectives, often involving subtle negotiations and alliances.