A company is in the process of changing it's credit policy...the policy is currently cash only...the new policy will involve one period's credit...sales are 70,000 units per period at a unit price $530 per unit...if credit is offered the new price will be $552. Unit sales are not expected to change and all customers are expected to take credit...2 % of credit sales will be uncollectible...if the required return is 2 % per period is this change a good idea?© BrainMass Inc. brainmass.com June 3, 2020, 8:06 pm ad1c9bdddf
Incremental Income after the taxes
1) Increase in Net Income
Sales*(New price-Old price)= 1540000
The solution looks at evaluating credit policy.