Question: You are considering setting up a booth at a street fair in a town not far from where you are located. Any sale you make
You are considering setting up a booth at a street fair in a town not far from where you are located. Any sale you make will be a onetime sale. There is only a percent chance that you will collect your money on a credit sale. The product you want to sell has a variable cost of $ and a sales price of $ The monthly interest rate is percent. Should you offer people days to pay? Why or why not?
Question options:
Yes; because you will earn $ on every credit sale you make.
Yes; because you will earn $ on every credit sale you make.
No; because the net present value of the potential sale is $
No; because the net present value of the potential sale is $
It doesn't matter; because the present value of the potential sale is $
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