If a firm refuses to offer credit the NPV of the transaction is:
A) the cash revenues received minus the cost paid in time period 0.
B) the discounted value of the revenues from time period 0.
C) the net cash flow from the future payments to be received.
D) determined by all of these factors.

Question

Quizplus · Accepted Answer

The NPV of a transaction where a firm refuses to offer credit is essentially the cash revenues received at the time of the transaction minus the costs paid at that same time (time period 0), as there are no future cash flows to discount.

If a Firm Refuses to Offer Credit the NPV of the Transaction