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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