Asked by Shayan Patel on Jul 06, 2024
Verified
When credit policy is at the optimal point, the:
A) Total costs of granting credit will be maximized.
B) Carrying costs of credit will be equal to zero.
C) Opportunity cost of credit will be equal to zero.
D) Carrying costs will equal the opportunity costs.
E) Total costs will equal the opportunity costs.
Optimal Point
The most favorable position or condition that yields the maximum benefit or efficiency in a given situation, such as in investment or production.
Credit Policy
Rules a business adheres to for assessing a customer's eligibility for credit and the stipulations under which it is offered.
Opportunity Cost
The most valuable alternative that is given up if a particular investment is undertaken.
- Learn the principles of optimal credit policy and its impact on a firm's finances.
Verified Answer
Learning Objectives
- Learn the principles of optimal credit policy and its impact on a firm's finances.
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