What is the profit if the firm has a cash-only policy

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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 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: 12,000 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: 3.00%

What is the profit if the firm has a cash-only policy?

Reference no: EM132986893

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