9. Analyzing proposed changes in credit policy A credit policy covers how customers qualify for credit, the maximum amount of credit that customers are allowed, the terms of credit sales, and wha actions will be taken if customers do not pay on time. To ensure that the credit policy is being followed and that it is achieving the desired objective, should be monitored. If customers' payment pattems change significantly, the firm should conslder changing its credit policy. Which statement best describes whether a proposed change in credit policy should be implemented? A policy that provides the lowest average collection period should be implemented. A policy that brings the company's average collection period in line with the industry average should be implemented. A policy that increases the value to the firm should be implemented. A policy that reduces the average collection period should be implemented. A new financial manager at Hansborough Company has proposed a change to the company's credit policy in order to lower the average collection period of the customers who forgo the discount by five days. The cost of the increased credit effort is 510 mililion, and the manager estimates that the company will lose 7% in gross sales as a result. The discount customers will not be affected. The proposed data, including the dally data, is reflected in the following table. the variable operating costs and the credit evaluation and coliection costs are incurred at the bime of sale, and that in Beo-day. ynar is used to compute the dally figures. Hansborough's cost of capital is 7.5%. Compleke the following sentences. Hansborough institute the proposed policy change, because the existing policy provides a net present vatue of compared to the proposed policy, which provides a net present value of Since this change is expected to have a permanent and continuing effect, this daily difference of wiII the value to the firm 9. Analyzing proposed changes in credit policy A credit policy covers how customers qualify for credit, the maximum amount of credit that customers are allowed, the terms of credit sales, and wha actions will be taken if customers do not pay on time. To ensure that the credit policy is being followed and that it is achieving the desired objective, should be monitored. If customers' payment pattems change significantly, the firm should conslder changing its credit policy. Which statement best describes whether a proposed change in credit policy should be implemented? A policy that provides the lowest average collection period should be implemented. A policy that brings the company's average collection period in line with the industry average should be implemented. A policy that increases the value to the firm should be implemented. A policy that reduces the average collection period should be implemented. A new financial manager at Hansborough Company has proposed a change to the company's credit policy in order to lower the average collection period of the customers who forgo the discount by five days. The cost of the increased credit effort is 510 mililion, and the manager estimates that the company will lose 7% in gross sales as a result. The discount customers will not be affected. The proposed data, including the dally data, is reflected in the following table. the variable operating costs and the credit evaluation and coliection costs are incurred at the bime of sale, and that in Beo-day. ynar is used to compute the dally figures. Hansborough's cost of capital is 7.5%. Compleke the following sentences. Hansborough institute the proposed policy change, because the existing policy provides a net present vatue of compared to the proposed policy, which provides a net present value of Since this change is expected to have a permanent and continuing effect, this daily difference of wiII the value to the firm