Question
A company is considering switching from a cash-only policy to a net 30 credit policy. The price per unit is $500 and the variable cost
A company is considering switching from a cash-only policy to a net 30 credit policy. The price per unit is $500 and the variable cost per unit is $400. The company currently sells 1,200 units per month. Under the proposed policy the company expects to sell 1,300 units per month. The required monthly return is 1%. If you were using NPV analysis to decide whether the company should switch to the net 30 credit policy, what amount would you use for the present value of the future incremental cash flows? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit any commas and the $ sign in your response. For example, an answer of $1,000.50 should be entered as 1000.50.)
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