Your fiRm Currently Sells 85 Units a Month at a Price

question 129

Multiple Choice

Your firm currently sells 85 units a month at a price of $400 a unit. You think you can increase your sales by an additional 30 units if you switch to a net 30 credit policy. The monthly interest rate is .5
Percent and your variable cost per unit is $280. What is the incremental cash inflow from the
Proposed credit policy switch?

• A) $2,400
• B) $3,200
• C) $3,600
• D) $10,800
• E) $12,000

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Definitions:

Contour Farming

An agricultural practice of tilling along the natural contours of the land to minimize soil erosion and water runoff.

Plowing

The act of turning over the upper layer of soil to prepare for sowing seeds or planting, traditionally done with plows pulled by farming animals or tractors.

Alley Cropping

An agroforestry practice where crops are grown in between rows of trees or shrubs, enhancing biodiversity and crop yield.

Hedgerows

Densely planted rows of shrubs or trees used as a barrier or boundary and to promote biodiversity in agricultural landscapes.