The Snedecker Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 4 percent per period.       Current PolicyNew PolicyPrice per unit$ 85$ 92Cost per unit$ 45$ 45Unit sales per month3,8003,850      Determine the NPV of the new policy. Answer Multiple Choice: $4,198,500 $-296,300 $414,440 $382,560 $398,500

2. Your company is evaluating a switch from a cash policy to a net 30 policy. The price per unit is $49, and the variable cost per unit is $20. The company currently sells 100 units per month. Under the proposed policy, the company expects to sell 110 units per month. The required monthly return is 2%. a) What is the NPV of the switch? Part 1: Incremental cash flow = (P – V)(S' – 5) Incremental cash flow = ($49 – $20)($110 – 100) Incremental cash flow = $29 * $10 = $290 t 2: Incremental cash flow Cost of capital Incremental cash flow Incremental cash flow =02 $290 = $14500 Part 3: Switch Cost = (P + S) + V(S' – 5) Switch cost = ($49 + 100) + $20($110 – $100) Switch cost = $4900 + $200 = $5100 Therefore: NPV of Switch = $14500 – $5100 = $9400

Lipsion Ltd company is thinking about investing in one of two potential new productsfor sale. The projections are as follows: year    revenue/ product s     revenue/ product v0              (150,000) outlay              (150000) outlay1                     14000                                  150002                      24000                                  253333                      44000                                  520004                       84000                               63333                                                                                                            Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%

Lipsion Ltd company is thinking about investing in one of two potential new productsfor sale. The projections are as follows: year    revenue/ product s     revenue/ product v0              (150,000) outlay              (150000) outlay1                     14000                                  150002                      24000                                  253333                      44000                                  520004                       84000                               63333                                                                                                             Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%. Then decide which product should be selected and why ?