Terms of Sale. Microbiotics currently sells all of its frozen dinners cash on delivery but believes it can increase sales by offering supermarkets 1 month of free credit. The price per carton is $50 and the cost per carton is $40.

a. If unit sales will increase from 1,000 cartons to 1,060 per month, should the firm offer the credit? The interest rate is 1 percent per month, and all customers will pay their bills.

b. What if the interest rate is 1.5 percent per month?

c. What if the interest rate is 1.5 percent per month, but the firm can offer the credit only as a special deal to new customers, while old customers will continue to pay cash on delivery?