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A company is considering switching from a cash only policy to a net 30 policy. Currently, the company sells 11,000 units per month at a
A company is considering switching from a cash only policy to a net 30 policy. Currently, the company sells 11,000 units per month at a price per unit of $1,200. Under the proposed net 30 policy, the company expects to sell 12,000 units per month. The variable cost per unit is $800. The required monthly return is 7%. If you were calculating the NPV for this decision to switch policies, what amount would you use for the cost of switching in your NPV analysis?
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