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:

Maslow

Refers to Abraham Maslow, a psychologist known for creating Maslow's hierarchy of needs, a theory in psychology about human motivation.

Alderfer

Refers to Clayton Alderfer's ERG theory, which categorizes human needs into three groups: existence, relatedness, and growth.

Motivation Theories

Theoretical frameworks that explain how individuals are motivated to achieve their goals and how this motivation influences their behavior.

Expectancy Theory

A motivational theory suggesting that individuals are motivated to act in a certain way based on their expectation that the act will be followed by a desired outcome.