Evaluating Credit Policy
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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?
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The solution looks at evaluating credit policy.
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Incremental Income after the taxes
1) Increase in Net Income
Sales*(New price-Old price)= 1540000
Less ...
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