Question

Sanchez, inc., is considering a change in its cash-only sales policy. the new terms of trade would be net one month. Based on the following information, determine if the company should proceed or not. Describe the buildup of receivables in this case. The required return is .95 percent per month.

Current Policy New Policy

Price per unit $540 $540

Cost per unit $395 $395

Unit sales per month 1080 1130

Answer #1

**Given,**

**Price per unit = $540**

**Cost per unit = $395**

**Current policy units = 1080**

**New policy units = 1130**

**Required return = 0.95% or 0.0095**

**Solution :-**

XYZ, Inc., is considering a change in its cash-only
sales policy. The new terms of sale
would be net one month.
Based on the following information, determine if the
company should proceed or not.
Describe the buildup of receivables in this case. The
required return is .95 percent
per month.
Current Policy
New Policy
Price per unit
$ 630
$ 630
Cost per unit
$ 495
$ 495
Unit sales per month
1,240
1,310

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.)

Devour, 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 1.2 percent per month.
Current Policy
New Policy
Price per unit
$700
$700
Cost per unit
$455
$455
Unit sales per month
980
1,050
Required :
Based on the above information, determine the NPV of the new
policy.
rev: 09_21_2012
$1,171,916.67
$1,372,000.00
$711,316.67
$739,769.33
$3,365,483.33

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 $ 59 $ 61 Cost per unit $ 33 $ 33 Unit sales
per month 2,450 ? What is the break-even quantity for the new
credit policy? Break-even quantity

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...

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
$...

The Berry Corporation is considering a change in its cash-only
policy. The new terms would be net one period. The required return
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break-even price per unit that should be charged under the new
credit policy? Assume that the sales figure under the new policy is
2,600 units and all other values remain the same. Calculate the
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Current Policy
New Policy
Price per unit
$
56
$...

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