Saxon Corporation Sells a Product for $48 with Costs of $33

Multiple Choice

Saxon Corporation sells a product for $48 with costs of $33 per unit.Saxon uses a 9% rate of return for all its calculations.The CFO estimates that there is a 20% probability of a prospective new customers seeking credit will go bankrupt within the next 6 months.Customer wishes to place an order for 1,000 units of the product.

A) Extend credit; total benefit of $3,780
B) Extend credit; total benefit of $3,880
C) Extend credit; total benefit of $3,980
D) Extend credit; total benefit of $4,080