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Category > Business & Finance Posted 13 Jul 2017 My Price 8.00

The Decision to Grant Credit: Risk and Information

The Decision to Grant Credit: Risk and Information

Berkshire Sports, Inc., operates a mail-order running-shoe business. Management is considering dropping its policy of no credit. The credit policy under consideration by Berkshire follows:

 

No Credit

Credit

Price per unit

$35

$40

Cost per unit

$25

$32

Quantity sold

2,000

3,000

Probability of payment

100%

85%

Credit period

0

1

Discount rate

0

3%

a. Should Berkshire offer credit to its customers?

b. What must the probability of payment be before Berkshire would adopt the policy?

Answers

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Status NEW Posted 13 Jul 2017 05:07 PM My Price 8.00

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