Since the credit decision usually includes riskier customers,the decision should adjust for this by:

Question

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When making a credit decision, it is important to consider the possibility of customers not making their payments, which is more likely to happen with riskier customers. To adjust for this risk, the decision should determine the probability of nonpayment and reduce the expected cash flows accordingly. This can be achieved by discounting the cash inflows at a higher rate, which reflects the increased uncertainty and risk associated with these customers. Therefore, choice A is the best option in this case.

Since the Credit Decision Usually Includes Riskier Customers,the Decision Should