Discuss ways in which real-life decisions are more complex than the decision illustrated in figure. How do

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Discuss ways in which real-life decisions are more complex than the decision illustrated in figure. How do you think these differences ought to affect the credit decision?

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Principles of Corporate Finance

ISBN: 978-0072869460

7th edition

Authors: Richard A. Brealey, Stewart C. Myers

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Question Posted: Jun 08, 2011 07:01 AM

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Discuss ways in which real-life decisions are more complex than the decision illustrated in figure. How do

Question:

Period 1 Poriod 2 REV2-COST, Customer pays P2=.95 Customer defaults Offer credit (1-P2) =.05 -COST2 Customer pays P: -.8 Refuse credit REV, - COST, 0. | Customer defaults ! (1-p1) = 2 Offer credit -COST, Refuse credit 0.

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In real life a Repeat orders are not certain even if the customer pays for the first ...View the full answer

Principles of Corporate Finance

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