A company is considering switching from a cash only policy to a net 30 credit policy. The price per unit is $800 and the variable cost per unit is $600. The company currently sells 1,000 units per month. Under the proposed policy the company expects to sell 1,500 units per month. The required monthly return is 4%. If you were using NPV analysis to decide whether the company should switch to the net 30 credit policy, what amount would you use for the present value of the future incremental cash flows? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit any commas and the $ sign in your response. For example, an answer of $1,000.50 should be entered as 1000.50.) Numeric Response

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

26) can i please get help ? 

A company is considering switching from a cash only policy to a net 30 credit policy. The price per unit is $800 and the variable cost per unit is $600. The company
currently sells 1,000 units per month. Under the proposed policy the company expects to sell 1,500 units per month. The required monthly return is 4%. If you were
using NPV analysis to decide whether the company should switch to the net 30 credit policy, what amount would you use for the present value of the future
incremental cash flows? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit any commas and the $ sign in your
response. For example, an answer of $1,000.50o should be entered as 1000.50.)
Numeric Response
Transcribed Image Text:A company is considering switching from a cash only policy to a net 30 credit policy. The price per unit is $800 and the variable cost per unit is $600. The company currently sells 1,000 units per month. Under the proposed policy the company expects to sell 1,500 units per month. The required monthly return is 4%. If you were using NPV analysis to decide whether the company should switch to the net 30 credit policy, what amount would you use for the present value of the future incremental cash flows? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit any commas and the $ sign in your response. For example, an answer of $1,000.50o should be entered as 1000.50.) Numeric Response
Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Depletion Allowance
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education