You Are Currently Selling 75 Units a Month at a Price

question 254

Multiple Choice

You are currently selling 75 units a month at a price of $495 a unit. Your variable cost of each unit is $360.If you switch from your current cash sales only policy to a net 30 policy you think your sales will increase by 20 percent. Your monthly interest rate is 1 percent. What is the net present value of
This proposed switch using the accounts receivable approach?

• A) $159,975
• B) $164,250
• C) $167,809
• D) $171,114
• E) $174,211

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Definitions:

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Firms

Businesses or companies engaged in commercial, industrial, or professional activities.

Sales Orientation

A business approach focused on selling as many products or services as possible, sometimes at the expense of customer needs or satisfaction.

Customer Orientation

a business approach focused on understanding and meeting the actual needs and desires of customers, rather than just selling products or services.