A firm currently produces and sells 2,500 units every 60 days. One unit costs $150 to...

 

Transcribed Image Text:

A firm currently produces and sells 2,500 units every 60 days. One unit costs $150 to produce and sells for $500. The firm currently offers all it's customers a "net 30" credit period and all customers pay on Day 60. In order to boost sales, the firm is considering Project D, which will simply add a window an offering a 10% discount for customers who pay immediately. Research suggests sales will increase sales to 2,600 units and approximately one quarter of all customers will pay on Day 0 and 75% will pay on Day 30. if the annualized cost of capital is 6%, what is the NPV of Project D7 The firm will continue to run to perpetuity. (Assume production and sales occur on Day 0 and repeat every 30 days). O $3.75 million O $3.35 million O $4.04 million O $2.25 million A firm currently produces and sells 2,500 units every 60 days. One unit costs $150 to produce and sells for $500. The firm currently offers all it's customers a "net 30" credit period and all customers pay on Day 60. In order to boost sales, the firm is considering Project D, which will simply add a window an offering a 10% discount for customers who pay immediately. Research suggests sales will increase sales to 2,600 units and approximately one quarter of all customers will pay on Day 0 and 75% will pay on Day 30. if the annualized cost of capital is 6%, what is the NPV of Project D7 The firm will continue to run to perpetuity. (Assume production and sales occur on Day 0 and repeat every 30 days). O $3.75 million O $3.35 million O $4.04 million O $2.25 million

Answer rating: 100% (QA)

Net Profit Value NPV Rli where R N... View the full answer