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Problem - Credit Card Sales - Gas stations sometimes sell gasoline at a lower price to customers who pay cash than to customers who use a credit card. A local gas station owner pays 2% of the sales price to the credit card company when customers pay with a credit card. The owner pays $2.00 per gallon of gasoline and must earn at least $0.99 per gallon of gross margin to stay competitive.
Required -
1. Determine the price the owner must charge credit card customers to maintain the station's gross margin.
2. How much discount could the owner offer to cash customers and still maintain the same gross margin?
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