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A Firm Currently Sells Its Product with a 2% Discount

question 76

Essay

A firm currently sells its product with a 2% discount to customers who pay by cash or credit card when they purchase one of the firm's products; otherwise, the full price is due within 30 days. Forty percent of customers take advantage of the discount. The firm plans to drop the discount so the new terms will simply be net 30. In doing so it expects to sell 100 fewer units per month and all customers to pay at day 30. The firm currently sells 1000 units per month at a cost per unit of $45 and a selling price per unit of $80. If the firm's required return is 2% per month, what is the net present value (NPV) of making this change? (Assume that all 1,000 units are sold at the beginning of the month and the cost of producing the units is paid immediately.)
A) -$169,860
B) -$122,420
C) $64,490
D) $172,320

Comprehend the debt-to-equity ratio and its significance in assessing a company's financial structure.

Recognize the rights and obligations associated with bonds, including bond indentures and collateral agreements.

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Definitions:

Social Media Practices

The strategies, habits, or methodologies employed by individuals or organizations to interact and engage with audiences on social media platforms.

Content Curation

A mixture of content that was published from a different source.

Content Strategy

A plan for the creation, publication, and governance of useful and usable content.

Large Amounts

A term used to describe a considerable quantity or volume of something.