A firm should change its credit policy if the net present value (NPV) of the proposed credit policy is both positive and less than the NPV of its existing credit policy.

Question

Quizplus · Accepted Answer

A firm should change its credit policy if the NPV of the proposed credit policy is both positive and greater than the NPV of its existing credit policy. A positive NPV indicates that the expected benefits of the proposed policy exceed the costs, while a negative NPV indicates the opposite. Therefore, the statement in the question is incorrect.

A Firm Should Change Its Credit Policy If the Net