Happy Times currently has an all-cash policy. It is considering making a change in the credit policy

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Happy Times currently has an all-cash policy. It is considering making a change in the credit policy by going to terms of net 30 days. Based on the following information, what do you recommend? The required return is 0.95 percent per month.

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Corporate Finance

ISBN: 978-0071339575

7th Canadian Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Gordon Ro

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Question Posted: Jun 17, 2015 04:52 AM

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Happy Times currently has an all-cash policy. It is considering making a change in the credit policy

Question:

Price per unit Cost per unit Unit sales per month Current policy $295 $230 1,105 New policy $302 $234 1,125

Step by Step Answer:

The cash flow from the old policy is Cash flow from old policy 295 2301105 Cash f...View the full answer

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