Ali Storage Company Projects 800 Customers Next Year

question 49

Essay

Ali Storage Company projects 800 customers next year. Of these,600 have been profitable and have never defaulted on past obligations,while 200 have not been profitable. All of the unprofitable accounts are expected to default if given credit. Ali can pay $0.40 to an agency that will tell them whether a customer has been profitable. If Ali's price per unit is $10,and its cost per unit is $6,should they allow the credit check to be performed?
Assume a discount rate of 1%.

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Definitions:

Non-servo Designs

Brake or other mechanical systems designed without the use of a servo mechanism, often simpler and requiring manual operation or greater force.

Secondary Shoe

In drum brakes, the brake shoe that is positioned to be actuated secondarily during brake application.

Primary Shoe

The brake shoe in a drum brake system that is closest to the front of the vehicle, playing a critical role in stopping the car.

Duo-servo Brakes

A brake system design where two brake shoes press outward against a drum, with each shoe's action amplifying the other's, enhancing braking efficiency.