No Credit Credit
Price per unit $35 $40
Cost per unit $25 $32
Quantity sold 2,000 3,000
Probability of payment 100% 85%
Credit period 0 1
Discount rate 0 3
a. Should Berkshire offer credit to its customers?
b. What must the probability of payment be before Berkshire would adopt the policy?
a. Revenue with no Credit:
Total profit per unit = 35-25 = 10
Total Revenue = 10 * ...
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