What credit decision is appropriate for a potential customer that offers an 80% chance of paying on a $10,000 (present value) sale that has an 80% (present value) cost?
A) Grant credit since expected profit is $800
B) Refuse credit since expected loss is $3,000
C) Grant credit since expected profit is $3,200
D) Refuse credit since expected profit is zero
Ans: D) Refuse credit since expected profit is zero
Business
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