Question

Codiac Corp. currently has an all-cash credit policy. It is considering making a change in the credit policy by going to terms of net 30 days. The required return is 0.79% per month.

Current Policy | New Policy | |||||

Price per unit | $ | 190 | $ | 194 | ||

Cost per unit | $ | 146 | $ | 150 | ||

Unit sales per month | 1,410 | 1,450 | ||||

Calculate the NPV of the decision to change credit policies.
**(Negative answer should be indicated by a minus sign. Do
not round intermediate calculations. Round the final answer to 2
decimal places. Omit $ sign in your response.)**

Answer #1

Codiac Corp. currently has an all-cash credit policy. It is
considering making a change in the credit policy by going to terms
of net 30 days. The required return is 0.87% per month.
Current Policy
New Policy
Price per unit
$
230
$
235
Cost per unit
$
170
$
175
Unit sales per month
1,650
1,700
Calculate the NPV of the decision to change credit policies.

Problem 28-10 Credit Policy Evaluation
Leeloo, Inc., is considering a change in its cash-only sales
policy. The new terms of sale would be net one month. The required
return is .62 percent per month.
Current Policy
New Policy
Price per unit
$
760
$
760
Cost per unit
$
555
$
555
Unit sales per month
820
870
Calculate the NPV of the decision to switch. (Do not
round intermediate calculations and round your answer to 2 decimal...

CLARIFY
Fahmi Enterprise has a cash-only sales policy. It is considering
changing to a credit policy of net 30 days. Information related to
the current and new policies is given in the table below. The
required rate of return is 0.75 percent per month.
Current Policy
New Policy
Price per unit (RM)
15.00
15.50
Cost per unit (RM)
8.00
8.40
Unit sales per month
2,000
2,050
Perform an analysis to show whether or not Fahmi Enterprise
should adopt the new...

clarify
Fahmi Enterprise has a cash-only sales policy. It is considering
changing to a credit policy of net 30 days. Information related to
the current and new policies is given in the table below. The
required rate of return is 0.75 percent per month.
Current Policy
New Policy
Price per unit (RM)
15.00
15.50
Cost per unit (RM)
8.00
8.40
Unit sales per month
2,000
2,050
Perform an analysis to show whether or not Fahmi Enterprise
should adopt the new...

Sanchez, Inc., is considering a change in its cash-only sales
policy. The new terms of sale would be net one month. The required
return is .82 percent per month. Current Policy New Policy Price
per unit $ 960 $ 960 Cost per unit $ 765 $ 765 Unit sales per month
1,020 1,100 Calculate the NPV of the decision to switch. (Do not
round intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)

The Snedecker Corporation is considering a change in its
cash-only policy. The new terms would be net one period. The
required return is 2 percent per period.
Current Policy
New Policy
Price per unit
$
84
$
86
Cost per unit
$
44
$
44
Unit sales per month
4,100
?
What is the break-even quantity for the new credit policy?
(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)

The Snedecker Corporation is considering a change in its
cash-only policy. The new terms would be net one period. The
required return is 2 percent per period.
Current Policy
New Policy
Price per unit
$
68
$
70
Cost per unit
$
36
$
36
Unit sales per
month
2,900
?
What is the break-even quantity
for the new credit policy? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Break-even
quantity...

The Snedecker Corporation is considering a change in its
cash-only policy. The new terms would be net one period. The
required return is 2 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 answer to 2 decimal
places, e.g., 32.16.)
Current Policy
New Policy
Price per unit
$
56
?
Cost per unit
$
32
$...

The Snedecker Corporation is considering a change in its
cash-only policy. The new terms would be net one period. The
required return is 2 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 answer to 2 decimal
places, e.g., 32.16.)
Current Policy
New Policy
Price per unit
$
56
?
Cost per unit
$
32
$...

22)company is considering switching from a cash only policy to a
net 30 credit policy. The price per unit is $500 and the variable
cost per unit is $400. The company currently sells 1,200 units per
month. Under the proposed policy the company expects to sell 1,300
units per month. The required monthly return is 1%. If you were
using NPV analysis to decide whether the company should switch to
the net 30 credit policy, what amount would you use...

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