Your Current Sales Consist of 32 Units Per Month at a Price

question 70

Multiple Choice

Your current sales consist of 32 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)$7,965
• D)$9,440
• E)$9,481

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Definitions:

Brand Loyalty

The tendency of consumers to continually purchase the same brand's products or services over time due to positive experiences and perceived value.

Market Segmentation Strategies

The process of dividing a broad consumer or business market into sub-groups based on shared characteristics, to tailor marketing strategies effectively.

Advantages and Disadvantages

A comparison of the positive aspects and drawbacks of a particular decision, product, or strategy.

Business Buying Process

A series of decisions made by organizations while purchasing products or services for operational, production, or reselling purposes.