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a. (7 marks ) A company is considering a change from its cash only sales policy to one-month credit sales. The required return is 1.5%
a. (7 marks ) A company is considering a change from its cash only sales policy to one-month credit sales. The required return is 1.5% per month. The information for each of the policies is provided below. Should the company change to the credit policy? what is the break-even quantity for the new credit policy? Current New Units Sold per Month 1.800 2.000 Price per Unit $30 $32 Variable Cost per Unit $20 $20 (b) (7 Marks) You own $9,000 worth of stock in a company that will pay a $6 per share dividend in 1 year and a liquidating dividend of $9 per share in 2 years. The required return on this company's equity is 20%. Assume you prefer a dividend of $1,800 at the end of year 1 and accomplish this by creating homemade dividends. What will your homemade dividend be in 2 years and how many shares will you own
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