What is the daily NPV (Z) of the following credit terms? Current Terms (E) Variables Net...

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What is the daily NPV (Z) of the following credit terms? Current Terms (E) Variables Net 30 Terms (all sales are credit sales) Sales Growth Rate g) Annual Credit Sales S1,000,000 Daily Credit Sales (S) $2,739.73 Cash Discount Offered -9% (d) Customers Taking Discount - % p) DSO-Discount Takers (DP) DSO - Non-Discount Takers (CP) 33 Variable Cost Ratio (VCR) 75% Collection/Credit Exp (EXP) at CP 1% Bad Debt Expense Ratio (b) 2% Annual Cost of Capital 10% ZE = SE(1-dE)PE(1-bE) / (1 + ¡DPE) + SE(1-pE)(1-bE) / (1 + ¡CPE) - VCR (SE) - EXPE (SE) / (1 + ¿CPE) 759% Variable Cost Ratio (VCR) 19% Collection/Credit Exp (EXP) at CP 2% Bad Debt Expense Ratio (b) 10% Annual Cost of Capital SE(1-dE)PE(1-be) / (1+ ¿DPE) + SE(1-pE)(1-bE) / (1 + ¿CPE) - VCR (SE) ZE = EXPE (SE) / (1 + ¿CP£) $579 O$597 $633 None of the above What is the daily NPV (Z) of the following credit terms? Current Terms (E) Variables Net 30 Terms (all sales are credit sales) Sales Growth Rate g) Annual Credit Sales S1,000,000 Daily Credit Sales (S) $2,739.73 Cash Discount Offered -9% (d) Customers Taking Discount - % p) DSO-Discount Takers (DP) DSO - Non-Discount Takers (CP) 33 Variable Cost Ratio (VCR) 75% Collection/Credit Exp (EXP) at CP 1% Bad Debt Expense Ratio (b) 2% Annual Cost of Capital 10% ZE = SE(1-dE)PE(1-bE) / (1 + ¡DPE) + SE(1-pE)(1-bE) / (1 + ¡CPE) - VCR (SE) - EXPE (SE) / (1 + ¿CPE) 759% Variable Cost Ratio (VCR) 19% Collection/Credit Exp (EXP) at CP 2% Bad Debt Expense Ratio (b) 10% Annual Cost of Capital SE(1-dE)PE(1-be) / (1+ ¿DPE) + SE(1-pE)(1-bE) / (1 + ¿CPE) - VCR (SE) ZE = EXPE (SE) / (1 + ¿CP£) $579 O$597 $633 None of the above

Answer rating: 100% (QA)

Answer NPV of Daily Sales is 579 Hence Option A is correct Explanation Daily Credit Sales S e is 2... View the full answer