1.

ABC company manufactures video games. Each video game has a price of $60 each and a variable cost of $15. This company is analyzing the possibility of giving more credit to their customers to increase the sales from 100.000 units to 120.000 units.

However, this credit relaxation would increase the average collection period from 35 days to 55 days. It will mean then that they'll need more investment in working capital to keep going on, and the expected return on any investment is the 15%. The bad debts are meant to increase as well from 1% to 5% of the sales. Calculate the total benefits using the following format: ($111.111)

2. From the same exercise calculate the total costs using the following format ($111.111) *round up

3. From the same exercise calculate the net result using the following format ($111.111) *round down

4. Is it convenient to give credit?

Yes

No