Difficulty:
Medium
Average Score:
50%
A convenience store is planning to install an automatic teller machine (ATM) for customers to withdraw money and check on their account balances when shopping in the store. The store intends to fund the ATM by way of a $2 surcharge that would be applied to every ATM transaction. The store averages about 2,500 retail transactions per month and does not expect that number to change with the addition of an ATM. However, the store estimates that 6 percent of those retail transactions would be accompanied by an ATM transaction if an ATM were installed in the store. The store is undecided whether it would be better to purchase its own ATM or to lease one. The store contacted Dollar Vending Services (DVS), an ATM installation and servicing company, to determine its available options.DVS Maintenance Plans:The table shows a comparison of the features of the three ATM service plans offered by DVS as well as the percentage of the ATM transaction surcharge that the store would receive under each plan. Under Plan A, the store would purchase an ATM directly from DVS and pay them to maintain and load cash into the machine. Under Plans B and C, the store would lease an ATM from DVS.Plan A provides no ATM included at no charge, no maintenance, no cash loading, and the store receives 100% of the ATM surcharge; Plan B includes the ATM at no charge, includes maintenance, no cash loading, and the store receives 50% of the surcharge; Plan C includes the ATM at no charge, includes maintenance, includes cash loading, and the store receives 0% of the surcharge.ATM COSTS:The table shows the costs that the store expects to incur from the installation and maintenance of an ATM. The purchase and installation costs are a one-time expense and the other costs are incurred monthly.purchase and installation cost $10,000 as a one-time expense, maintenance costs $250 per month, and cash loading costs $150 per month.