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Little Runabout Inc, makes small trailers for light-duty towing behind SUVs and small pickup trucks. Its trailers typically sell for $2,500. Many of its customers
Little Runabout Inc, makes small trailers for light-duty towing behind SUVs and small pickup trucks. Its trailers typically sell for $2,500. Many of its customers have asked for credit terms to aid in purchasing the trailers. The firm's finance department has estimated the following profile for its light-duty trailers and customer base: Annual sales: 10,000 trailers Annual production costs per trailer: $1.500 Lost sales if credit is not provided for customers: 2,000 trailers Default rate if all customers purchase on credit: 3.0096 What is the change in the profit if the firm moves from a cash-only policy to a credit policy? a $15,000,000 $9,250,000 $8,000,000 Od $1,250,000
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