Lory Corporation Has Variable Cost Per Unit of £

question 107

Essay

Lory Corporation has variable cost per unit of £.35 per £1 of sales.The firm offers a 2% discount for
orders paid within 15 days if the customer increases their order size by 5%.A customer normally
orders £75,000, and is considering the discount.Normally, the customer pays within 30 days with
no discount.Lory 's cost of debt capital is 12%.Would Lory be wise to offer the discount? Calculate
the NPV of the decision.

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Definitions:

Actions Affect

refers to the impact that an individual's actions have on their feelings and emotions.

Face Game

A social interaction strategy where individuals manage their actions and presentations in social situations to maintain their dignity or social status.

Increased Visibility

Enhanced ability to be seen or noticed, often used in the context of projects, tasks, or individuals within an organization to improve monitoring or recognition.

PAIBOC

An acronym standing for Purpose, Audience, Information, Benefits, Objections, and Context, used in communication planning.