Question

In: Economics

Mr. Rich Mann, is the credit manager of MCC Inc. Mr. Mann would like to estimate...

Mr. Rich Mann, is the credit manager of MCC Inc. Mr. Mann would like to estimate the cost of credit sales. From experience, credit customers have paid their bills in an average of 40 days and a standard deviation of 12 days. Customers who pay their bills in 10 days receive a 2% discount. Accounts that are not paid within 75 days are written off as bad debts. (Assume a normal distribution)

  1. What percentage of accounts is within 25 and 60 days old?
  2. What percentage of the accounts is written off as bad debts or receives the discount

Solutions

Expert Solution

Anwer for the values we first calculate the Z value then look up the value in z table to find the answers.

Detailed answer is provided in the attached image


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