Your current sales consist of 40 units per month at a price of $125 a unit. You are weighing the pros and cons of switching to a net 30 credit policy from your current cash only policy. If you decide to switch your credit policy you also plan to increase the sales price to $139 a unit. The monthly interest rate is 1.5 percent. What is the break-even default rate of the proposed switch?
A) 8.25 percent
B) 8.42 percent
C) 8.67 percent
D) 8.72 percent
E) 9.06 percent

Question

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The Answer of Your current sales consist of 40 units per month at a price of $125 a unit. You are weighing the pros and cons of switching to a net 30 credit policy from your current cash only policy. If you decide to switch your credit policy you also plan to increase the sales price to $139 a unit. The monthly interest rate is 1.5 percent. What is the break-even default rate of the proposed switch?
A) 8.25 percent
B) 8.42 percent
C) 8.67 percent
D) 8.72 percent
E) 9.06 percent

Your Current Sales Consist of 40 Units Per Month at a Price