Share
Explore BrainMass

Credit and Cash Management - Harrington Corporation

The Harrington Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5 percent per period. Based on the following information, what is the break-even price per unit that should be charged under the new credit policy? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Current Policy New Policy
Price per unit $ 104 ?
Cost per unit $ 47 $ 47
Unit sales per month 3,240 3,400
________________________________________

The Harrington Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5 percent per period.

Current Policy New Policy
Price per unit $ 104 $ 108
Cost per unit $ 47 $ 47
Unit sales per month 3,240 3,295
________________________________________

Calculate the NPV of the decision to change credit policies. (Do not round intermediate calculations.)

NPV $

Solution Summary

The solution is provided in excel (There are two excel sheets in the document) that uses cell references so if you change the given data, excel will do the calculations for you.

$2.19