UPENN: LOOSE LEAF CORP.FIN W/CONNECT
17th Edition
ISBN: 9781260361278
Author: Ross
Publisher: McGraw-Hill Publishing Co.
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Chapter 28, Problem 19QP
Summary Introduction
To determine: The break-even price per unit that should be charged under the new credit policy.
Credit Policy:
The credit policy is that policy of a company or a government which shows that how much amount is needed and how much is borrowed.
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The Berry Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is
2.5% per period.
Price per unit
Cost per unit
Unit sales per month
NPV
Current Policy New Policy
$
$
$
38
3,280
Calculate the NPV of the decision to change credit policies. (Omit "$" sign In your response. Negative answer should be Indicated
by a minus sign.)
38
3,398
Your business currently only accepts cash-only transactions. You are
considering making a change by going to terms of net 30 days. With the following
information, should you change your credit policy? Required return per month is 1.05
percent.
Current
New Policy
Policy
$ 13,150
$ 10,500
$ 13,550
$ 10,500
Price per unit
Cost per unit
Unit sales per
2,750
3,000
month
The Branson Corporation is considering a change in its cash-only policy. The new terms
would be net one period. The required return is 1.5 percent per period.
Price per unit
Cost per unit
Unit sales per month
Current Policy
$59
$33
2,450
NPV
New Policy
$61
$33
2,575
Calculate the NPV of the decision to change credit policies. (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g., 32.16.)
Chapter 28 Solutions
UPENN: LOOSE LEAF CORP.FIN W/CONNECT
Ch. 28 - Prob. 1CQCh. 28 - Trade Credit forms In what form is trade credit...Ch. 28 - Prob. 3CQCh. 28 - Five Cs or Credit What arc the five Cs of credit?...Ch. 28 - Credit Period Length What are some of the factors...Ch. 28 - Credit Period Length In each of the following...Ch. 28 - Inventory Types What are the different inventory...Ch. 28 - Just-in-Time Inventory If a company moves to a JIT...Ch. 28 - Inventory Costs If a companys inventory carrying...Ch. 28 - Inventory Period At least part of Dells corporate...
Ch. 28 - Prob. 1QPCh. 28 - Size of Accounts Receivable The Paden Corporation...Ch. 28 - ACP and Accounts Receivable Kyoto Joe, Inc., sells...Ch. 28 - Size of Accounts Receivable Tidwell, Inc., has...Ch. 28 - Terms of Sale A firm offers terms of 1/10, net 30....Ch. 28 - ACP and Receivables Turnover Chen, Inc., bas an...Ch. 28 - Size of Accounts Receivable Essence of Skunk...Ch. 28 - Size of Accounts Receivable The Arizona Bay...Ch. 28 - Evaluating Credit Policy Air Spares is a...Ch. 28 - Credit Policy Evaluation Leeloo, Inc., is...Ch. 28 - EOQ Fhloston Manufacturing uses 1,860 switch...Ch. 28 - EOQ The Trektronics store begins each week with...Ch. 28 - EOQ Derivation Prove that when carrying costs and...Ch. 28 - Credit Policy Evaluation The Harrington...Ch. 28 - Credit Policy Evaluation Happy Times currently has...Ch. 28 - Credit Policy The Silver Spokes Bicycle Shop has...Ch. 28 - Break-Even Quantity In Problem 14, what is the...Ch. 28 - Prob. 18QPCh. 28 - Prob. 19QPCh. 28 - Safety Stocks and Order Points Sach, Inc., expects...Ch. 28 - Evaluating Credit Policy Solar Engines...Ch. 28 - Evaluating Credit Policy In the previous problem,...Ch. 28 - Prob. 1MC
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