What is the incremental cash flows from switching credit policies? a. b. What is the cost of switching? c. What is your recommendation?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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3.
Answer the following questions based on the information below
Current credit policy(n/a) Proposed credit policy (net 30)
Price (RO)
10
12
Variable cost per unit (RO)
4
Quantity
100,000
150,000
Monthly rate
2%
What is the incremental cash flows from switching credit policies?
a.
b.
What is the cost of switching?
c. What is your recommendation?
Transcribed Image Text:3. Answer the following questions based on the information below Current credit policy(n/a) Proposed credit policy (net 30) Price (RO) 10 12 Variable cost per unit (RO) 4 Quantity 100,000 150,000 Monthly rate 2% What is the incremental cash flows from switching credit policies? a. b. What is the cost of switching? c. What is your recommendation?
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