In general,a firm's credit policy should grant credit whenever the expected:

Question

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A firm should grant credit if the expected profit from granting credit exceeds the expected profit from refusing credit. This means that the firm should compare the potential revenue from granting credit to the additional costs associated with granting credit, such as the cost of capital, administration, and potential defaults. If the expected profit from granting credit is greater than the expected profit from refusing credit, then the firm should grant credit.

In General,a Firm's Credit Policy Should Grant Credit Whenever the Expected