When Analyzing the NPV of a Decision to Change Cash

question 50

Multiple Choice

When analyzing the NPV of a decision to change cash discounts, the firm would probably not consider:

• A)the size of the discount.
• B)the expected change in the order size.
• C)the firm's cost of debt.
• D)the expected change in sales due to the cash discount policy change.
• E)All of the above would probably be considered.

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Definitions:

Shares Of Stock

Units of ownership interest in a corporation or financial asset, which provide for an equal distribution in any profits, if any are declared, in the form of dividends.

Cash

Physical or digital money in hand or readily available for transactions or use.

Convertible Debt

A short-term loan that can be turned into equity when future financing is issued.

Convertible Bond

A type of bond issued by a corporation that can be converted into a predetermined number of the company's equity shares at certain times during the bond's life, usually at the discretion of the bondholder.