Currently, your firm sells 700 units a month at a price of $80 a unit. You think you can increase your sales by an additional 200 units a month if you switch to a net 30 credit policy. The quarterly compounded APR is 6% and your variable cost per unit is $45. What is the present value for the incremental cash inflow of the proposed credit policy switch? (Do not use the $ sign. If your answer is $1,234.56, enter 1234.56) Numeric Response

Currently, your firm sells 700 units a month at a price of $80 a unit. You think you can increase your sales by an additional 200 units a month if you switch to a net 30 credit policy. The quarterly compounded APR is 6% and your variable cost per unit is $45. What is the present value for the incremental cash inflow of the proposed credit policy switch? (Do not use the $ sign. If your answer is $1,234.56, enter 1234.56) Numeric Response

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 2P

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Your firm sells for cash only, but it is thinking of offering credit, allowing customers 90 days to pay. Customers understand the time value of money, so they would all wait and pay on the 90th day. To carry these receivables, you would have to borrow funds from your bank at a nominal 7%, daily compounding based on a 360-day year. You want to increase your base prices by exactly enough to offset your bank interest cost. To the closest whole percentage point, by how much should you raise your product prices? Do not round intermediate calculations. Round your answer to the nearest whole number.