Forty-Five Percent of an Organization's Customer Payments Are Submitted Online

Multiple Choice

Forty-five percent of an organization's customer payments are submitted online. Eight percent of online payments are rejected. Executive management decides to outsource its online payment services to a contractor that will assume 75 percent of the total value of rejected payments. The organization estimates $1.25 million customer payments due during the contract period. Which of the following represents the organization's residual risk for online customer payments due?

A) $11, 250
B) $25, 000
C) $33, 750
D) $45, 000