Decisions on granting credit,or changing credit or collection policies,involve an analysis of the magnitude and timing of the cash flow and the risks and returns expected.This evaluation is done with a net present value framework.

Question

Quizplus · Accepted Answer

A net present value framework is commonly used for evaluating the expected cash flows, risks, and returns associated with credit decisions and collection policies. This involves analyzing the present value of future cash flows and comparing it to the initial investment or cost of credit.

Decisions on Granting Credit,or Changing Credit or Collection Policies,involve an Analysis