Ebbert, Inc., is considering a change in its cash only sales policy. The new terms of sale

Question:

Ebbert, Inc., is considering a change in its cash only sales policy. The new terms of sale would be net one month. Based on the following information, determine if Ebbert should proceed or not. Describe the buildup of receivables in this case. The required return is 1.5 percent per month.

Price per unit Cost per unit Unit sales per month Current Policy $ 750 $ 400 1,100 New Policy $ 750 $ 400