Samana Corporation expects to receive $1,500 along with costs of $1,000 on each non-delinquent sale on credit. The probability of collection is 60%. Determine whether credit should be extended.
A) Do not extend credit - net detriment of $100
B) Extend credit - net benefit of $0
C) Extend credit - net benefit of $100
D) Do not extend credit - net detriment of $200
Answer: A) Do not extend credit - net detriment of $100
You might also like to view...
A non-profit corporation:
a. cannot generate any income. b. always has tax exempt status. c. cannot distribute any profit to its members. d. Both b and c e. All of the above
What is the name given to a small service facility that is staffed by a parent bank personnel and designed to assist the clients of
the parent bank in their dealings with information about local business practices and credit evaluation of the MNC's foreign customers? A) offshore banking center B) foreign branch of a bank C) representative office D) international banking facility