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Sanchez, inc., is considering a change in its cash-only sales policy. the new terms of trade...

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

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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 :-

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