You are currently selling 60 units a month at a price of $195 a unit. Your variable cost of each unit is $145. If you switch from your current cash sales only policy to a net 30 policy you think your sales will increase to a total of 100 units per month. Your monthly interest rate is 1.5 percent. What is the net present value of this proposed switch using the accounts receivable approach?
A) $115,833
B) $126,667
C) $133,333
D) $145,667
E) $152,833
Correct Answer:
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