When issuing a new credit card to a potential customer what sunk costs would be ignored...
When issuing a new credit card to a potential customer what sunk costs would be ignored for the purposes of the credit decision?
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expected loss from a potential default |
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cost of servicing the card |
|
interest rate that could be earned elsewhere |
|
cost of advertising or mailer sent to acquire a new customer |
Homework Answers
Answer: cost of advertising or mailer sent to acquire a new customer.
Explanation:
Sunk cost refers to the cost incurred, which cannot be recovered in the future.
Credit decision refers to the decision regarding the amount of credit that should be allowed to a customer.
Advertising and mail cost has nothing to do with the assessment of the credit worthiness of the potential customer and hence will be ignored.
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When issuing a new credit card to a potential customer what sunk
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