Should credit be granted to a customer wishing to purchase a $2,000 item that has been marked-up 50% over cost if the probability of collection is only 65%? Assume all cash flows are discounted to present value.
A) Yes; the expected profit is $150.00
B) Yes; the expected profit is $33.33
C) No; the expected loss is $33.33
D) No; the expected loss is $150.00
Ans: C) No; the expected loss is $33.33
Business
You might also like to view...
The modified DuPont formula relates the firm's return on total assets (ROA) to its ________
A) return on equity (ROE) B) operating leverage multiplier C) net profit margin D) total asset turnover
Business
What account should be debited when stock issuance costs are associated with the initial issuance of stock at incorporation?
A) Organization Expense B) Additional Paid-in Capital C) Organization Costs D) Common stock
Business