You are trying to attract new customers that you feel could become repeat customers. The average price of the items you sell is $49 with a $35 variable cost. Your monthly interest rate is 1.2 percent. Your experience tells you that 5 percent of these customers will never pay their bill. What would be the net present value of this decision?
A) $979
B) $989
C) $1,023
D) $1,073
E) $1,108

Question

Quizplus · Accepted Answer

The Answer of You are trying to attract new customers that you feel could become repeat customers. The average price of the items you sell is $49 with a $35 variable cost. Your monthly interest rate is 1.2 percent. Your experience tells you that 5 percent of these customers will never pay their bill. What would be the net present value of this decision?
A) $979
B) $989
C) $1,023
D) $1,073
E) $1,108

You Are Trying to Attract New Customers That You Feel