DIY is reviewing its credit policy. Currently, it offers credit to all customers and the default rate
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DIY is reviewing its credit policy. Currently, it offers credit to all customers and the default rate is 16%. A rating agency charges DIY a fixed fee per report. It has 76% successful rate to identify nondefault customers and issue a positive credit report. It has 81% successful rate to identify default customers and issue a negative credit report.
DIY plans to only accept customers who has a positive credit report from the credit rating agency. If the average revenue and cost of providing services to a customer are $253 and $225 respectively.
What is the maximum fee DIY is willing to pay for a credit report?
Related Book For
Financial Management for Decision Makers
ISBN: 978-0138011604
2nd Canadian edition
Authors: Peter Atrill, Paul Hurley
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