Assuming that a credit decision has been analyzed and credit refused due to a negative expected profit, which of the following changes, if of sufficient magnitude, might change the decision to one of approval?
A) Increase the percentage of profit margin
B) Decrease the probability of payment
C) Increase the discount rate
D)Reduce the selling price

Question

Quizplus · Accepted Answer

Increasing the percentage of profit margin would result in a greater profit on the sale, potentially offsetting the initial negative expected profit and making the credit decision favorable. Decreasing the probability of payment, increasing the discount rate or reducing the selling price would further decrease the expected profit and not change the initial decision.

Assuming That a Credit Decision Has Been Analyzed and Credit