Your Current Sales Consist of 40 Units Per Month at a Price

question 214

Multiple Choice

Your current sales consist of 40 units per month at a price of $125 a unit. You are weighing the pros and cons of switching to a net 30 credit policy from your current cash only policy. If you decide to switch your credit policy you also plan to increase the sales price to $139 a unit. If you make the switch you do not expect your total monthly sales to change but you do expect a 1 percent default rate. The monthly interest rate is 1.5 percent. What is the net present value of the proposed credit policy switch?

• A) $26,845
• B) $27,002
• C) $28,778
• D) $28,619
• E) $28,909

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Definitions:

Cognitive Ability

The capacity to perform various mental activities such as learning, thinking, reasoning, problem-solving, decision-making, and remembering.

Critical Appraisals

The process of systematically examining research evidence to assess its validity, results, and relevance before using it to inform a decision.

Parent-Child Interactions

The dynamic exchanges between a parent and child, encompassing all forms of communication and behavior, and influencing the child's social, emotional, and cognitive development.

Middle Childhood

A developmental stage that typically covers the period from around age 6 to puberty, marked by significant growth in social, cognitive, and physical areas.