Your Current Sales Consist of 27 Units Per Month at a Price

question 72

Multiple Choice

Your current sales consist of 27 units per month at a price of $225 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 $240 a unit. If you make the switch you do not expect your total monthly sales quantity to change but you do expect a 3 percent default rate. The monthly interest rate is 1.5 percent. What is the net present value of the proposed credit policy switch?

• A)$6,727
• B)$6,893
• C)$7,206
• D)$7,965
• E)$8,481

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Definitions:

Stress

A state of mental or emotional strain or tension resulting from adverse or demanding circumstances.

Burn Dressing

A protective covering applied to a burn to promote healing and prevent infection.

Analgesics

Drugs designed to relieve pain without causing a loss of consciousness; they include both non-opioid and opioid medications.

Topical Medication

Topical medication is a type of medicine applied directly to a specific area of the skin to treat local conditions or symptoms.