How may units ordered should cast iron undertake such check

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Reference no: EM131591729

Cast Iron Company, on each nondelinquent sale, receives revenues with a present value of $1,240 and incurs costs with a value of $1,070. Cast Iron has been asked to extend credit to a new customer. You can find little information on the firm, and you believe that the probability of payment is no better than .76. But if the payment is made, the probability that the customer will pay for the second order is .93.

If it costs $15.50 to determine whether a customer has been a prompt or slow payer in the past, at how may units ordered should Cast Iron undertake such a check? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal place.)

Break-even point ______ units

Reference no: EM131591729

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