Happy Times currently has an all-cash credit policy. It is considering making a change in the credit

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Happy Times currently has an all-cash credit policy. It is considering making a change in the credit policy by going to terms of net 30 days. Based on the following information, what do you recommend?

The required return is .95 percent per month.

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Corporate Finance

ISBN: 978-0077861759

10th edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

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Question Posted: Aug 28, 2014 10:34 AM

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Happy Times currently has an all-cash credit policy. It is considering making a change in the credit

Question:

Current Policy New Policy Price per unit Cost per unit Unit sales per month $295 $230 1,105 $302 $234 1,125

Step by Step Answer:

The cash flow from the old policy is Cash flow from old policy 295 2301105 Cash fl...View the full answer

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