Table 15.5 Caren's Canoes Is Considering Relaxing Its Credit Standards to Encourage

question 105

Multiple Choice

Table 15.5
Caren's Canoes is considering relaxing its credit standards to encourage more sales. As a result, sales are expected to increase 15 percent from 300 canoes per year to 345 canoes per year. The average collection period is expected to increase to 40 days from 30 days and bad debts are expected to double the current 1 percent level. The price per canoe is $850, the variable cost per canoe is $650 and the average cost per unit at the 300 unit level is $700. The firm's required return on investment is 20 percent. (Assume a 360-day year)
-What is the net result of implementing the proposed plan? (See Table 15.5)

• A) $3,952
• B) $3,869
• C) $2,084
• D) -$2,084

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Definitions:

Barber and Spanos

Researchers known for their work in the field of hypnotism, particularly for studies that distinguish between traditional hypnotic induction and role-playing in hypnosis.

Age-Regression

A psychological phenomenon in which an individual reverts to a previous state of mental development or relives experiences from a past age or life stage.

Hypnotized

A trance-like state resembling sleep, typically induced by a therapist by focusing a person's attention, that heightens their suggestibility, memory, and imagination.

Freudian Terms

Concepts and theories developed by Sigmund Freud that focus on the unconscious mind, psychosexual stages, and defense mechanisms among others.