The Silver Spokes Bicycle Shop has decided to offer credit to its customers during the spring selling season. Sales are expected to be 750 bicycles. The average cost to the shop of a bicycle is $350. The owner knows that only 95 percent of the customers will be able to make their payments. To identify the remaining 5 percent, the company is considering subscribing to a credit agency. The initial charge for this service is $620, with an additional charge of $5 per individual report.

a.	What is the cost of the subscription to the credit agency? (Do not round intermediate calculations.)
b.	What is the savings from collection of the bad debts? (Do not round intermediate calculations.)
c.	What are the company's net savings from subscribing to the credit reports? (Do not round intermediate calculations.)

Should company subscribe to the agency?

• Yes

• No

The Snedecker Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 1.6 percent per period.

	Current Policy			New Policy
Price per unit	$	62		$	64
Cost per unit	$	34		$	34
Unit sales per month		2,600			2,720

Calculate the NPV of the decision to change credit policies. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)