The Branson Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5 percent per period. Price per unit Cost per unit Unit sales per month Current Policy $71 $37 3,050 New Policy $73 $37 ? What is the break-even quantity for the new credit policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) 000 Answer is complete but not entirely correct.

The Branson Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5 percent per period. Price per unit Cost per unit Unit sales per month Current Policy $71 $37 3,050 New Policy $73 $37 ? What is the break-even quantity for the new credit policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) 000 Answer is complete but not entirely correct.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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The Branson Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2 percent per period. Price per unit Cost per unit Current New Policy Policy $ 86 $ 88 $46 $46 Unit sales per month 4,400 ? What is the break-even quantity for the new credit policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Break-even quantity 4,397.63x
The Branson Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5 percent per period. Current Policy New Policy Price per unit $ 85 $ 87 Cost per unit $ 45 $ 45 Unit sales per month 4,250 ? What is the break-even quantity for the new credit policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
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The Branson Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 1.5 percent per period. Price per unit Cost per unit Unit sales per month Current Policy $59 $33 2,450 NPV New Policy $61 $33 2,575 Calculate the NPV of the decision to change credit policies. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The Snedecker Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2 percent per period. Based on the following information, what is the break-even price per unit that should be charged under the new credit policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Price per unit Cost per unit Unit sales per month Break-even price $ Current Policy $ 53 $31 2,150 New Policy ? $ 31 2,400
The Berry Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5% per period. Price per unit Cost per unit Unit sales per month NPV Current Policy New Policy $ $ $ 38 3,280 Calculate the NPV of the decision to change credit policies. (Omit "$" sign In your response. Negative answer should be Indicated by a minus sign.) 38 3,398
CJ Stores has current cash-only sales of 218 units per month at a price of $236.55 a unit. If it switches to a net 30 credit policy, the credit sales price will be $249 while the cash price will remain at $236.55. The switch is not expected to affect the sales quantity but a 3 percent default rate is expected. The monthly interest rate is 1.4 percent. What is the net present value of the proposed credit policy switch? a. 24,727 b. 27,965 c. 26,893 d. 29,481 e. 25,978
[Question text] Syarikat Sinergi is considering a new credit policy. The current policy is cash only. The new policy would involve extending credit for one period or net 30. Based on the following information, determine if the switch is advisable. The interest rate is 2.5% per period. CURRENT POLICY NEW POLICY Price per unit RM175 RM175 Cost per unit RM130 RM130 Sales per period in units 1.000 1,100 Select one: A. Yes, the switch should be made because the NPV is RM8,000. B. No, the switch should not be made because the NPV is -RM4,500. C. Yes, the switch should be made because the NPV is RM4,500. D. No, the switch should not be made because the NPV is -RM8,000.
10. Marca Leon is planning to change its credit policy. The proposed change is expected to shorten the collection period from 50 days to 30 days, increase the ratio of cash sales to total sales from 20% to 30%, and decrease total sales by 10%. 10 If projected sales for the coming year is P40,000,000, what is the difference on the average accounts receivable between the current and the proposed change in credit policy? Assume 360 days in a year. a. P2,344,444 b. P2,604,939 c. P4,938,272 d. cannot be determined
A Zack Firm is evaluating an Accounts Receivable Change that would increase Bad Debts from 2% to 4% of Sales. Sales are currently 50,000 units, the selling price is $20 per unit, and the Variable Cost per unit is $15. As a result of the proposed change, sales are forecast to increase to 60,000 units. A. What are Bad Debts in Dollars currently? (Format: 11,111) B. What are Bad Debts in Dollars under the Proposed Change? (Format: 11,111) C. Calculate the Cost of the Marginal Bad Debts to the firm. (Format: 11,111)
3. Answer the following questions based on the information below Current credit policy(n/a) Proposed credit policy (net 30) Price (RO) 15 17 Variable cost per unit (RO) 8. 12 Quantity 200,000 300,000 Monthly rate 1.25% a. What is the incremental cash flows from switching credit policies? b. What is the cost of switching? c. What is your recommendation? d. We assume that the variable cost and the price per unit remain stable as in the current policy, calculate and interpret the break-even sales increase. e. What is the break-even probability of default if we assume one time scale? Interpret.
A company plans to tighten its credit policy. The new policy will decrease the average number of days in collection from 75 to 50 days and will reduce the ratio of credit sales to total revenue from 70% - 60%. The company estimates that projected sales would be 5% less if the proposed new credit policy is implemented. If projected sales for the coming year are P50 million, calculate the estimated peso change in the firm's account receivable balance caused by this proposed change in credit policy. Assume a 365-day year. [Answer format: INCREASE 1234567]