Question
A firm currently uses credit terms of net 30 with no discounts allowed. It has sales of $1M (M = million), cost of sales (at
A firm currently uses credit terms of net 30 with no discounts allowed. It has sales of $1M (M = million), cost of sales (at t = 0) of $0.6M. On average, 98.5% of customers pay in 1.5 months, while 1.5% of customers never pay. Its required rate of return is 1% per month. What is the NPV of one years sales under the current policy?
Group of answer choices
about $385,000
about $350,000
about $345,001
about $370,407
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Public Finance and Public Policy
Authors: Jonathan Gruber
4th edition
1429278455, 978-1429278454
