Problem:

Frank's Formals rents apparel throughout the year. They have experienced non-payment by about 15% of their customers with an average loss of $400. Frank's wants to stem their losses by using an instant electronic credit check on the customer. These checks will cost them $15 on each of the 1,000 customers. The opportunity cost is 2.0% for the credit period. Should they pursue the credit check?

• No, because the $15,000 cost is too high.
• No, because a $400 loss is minor.
• Yes, because the net gain is $30,000.
• Yes, because the net gain is $45,000.
• Yes, because the net gain is $60,000.

Note: Give you opinion citing relevant ethical principles.