The Silver Spokes Bicycle Shop has decided to offer credit to its customers duri

Question

The Silver Spokes Bicycle Shop has decided to offer credit to its customers during the spring selling season. Sales are expected to be 500 bicycles. The average cost to the shop of a bicycle is $390. The owner knows that only 96% of the customers will be able to make their payments. To identify the remaining 4%, the company is considering subscribing to a credit agency. The initial charge for this service is $750, with an additional charge of $6 per individual report. Should she subscribe to the agency?

Explanation / Answer

money saved for 4 customers is 390 * 4 = 1560 money spent is 750 + 100 * 6 = 1350 1560 > 1350 its worth subsribing to the agency

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