In a compensation deal, the seller sells a plant, equipment, or technology to another country and agrees to accept as partial payment products manufactured with the supplied equipment

Saxon Corporation sells a product for $48 with costs of $33 per unit. Saxon uses a 9% rate of return for all its calculations. The CFO estimates that there is a 20% probability of a prospective new customers seeking credit will go bankrupt within the next 6 months. Customer wishes to place an order for 1,000 units of the product.

A) Extend credit; total benefit of $3,880 B) Extend credit; total benefit of $3,780 C) Extend credit; total benefit of $3,980 D) Extend credit; total benefit of $4,080

Which of the following is true regarding the relationship between AOQ and the true population percent defective?

A) AOQ is greater than the true percent defective. B) AOQ is the same as the true percent defective. C) AOQ is less than the true percent defective. D) There is no relationship between AOQ and the true percent defective. E) The relationship between these two cannot be determined.