Question
Firm A is a successful firm and thus the going concern is applied. Customer B requests a change of credit policy from cash only
Firm A is a successful firm and thus the going concern is applied. Customer B requests a change of credit policy from cash only to net 30 days. Assuming the price per unit is $50, the variable cost per unit is $30, the current quantity sold per month is 100, the quantity sold under the new policy per month is 120, and the monthly required return is 2%, calculate the NPV of the switch.
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Solution Net Present Value NPV of the switch from a cashonly credit policy to a net 30 days credit policy for Firm A Step 1 Calculate the total revenu...Get Instant Access with AI-Powered Solutions
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