You Are Calculating the NPV of One Day's Sales Associated

question 5

Multiple Choice

You are calculating the NPV of one day's sales associated with a given credit policy that does not offer a discount and has an average collection period of 45 days.You should discount variable costs _____ days and credit administration and collection expenses ______ days.

• A)0,0
• B)0,45
• C)45,45
• D)45,0

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Definitions:

Sales Mix

The combination of products or services that a company sells, typically analyzed to understand its impact on overall profitability.

Break-Even Point

The level of production or sales volume at which total revenues equal total expenses, resulting in zero profit or loss.

Fixed Costs

Costs that do not fluctuate with the level of production or sales, such as rent and salaries.

Sales Mix

The ratio of various goods or services contributing to a company's overall sales.