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A firm is evaluating a switch from a cash-only to a net 30 credit policy. The present value of the cost of switching is RM108,000.
A firm is evaluating a switch from a cash-only to a net 30 credit policy. The present value of the cost of switching is RM108,000. The contribution margin (price - variable cost) per unit of the firms product is RM60. The firm currently sells 900 units per month. If the required monthly return is 1.5% and the product's contribution margin is unchanged, what is the minimum number of units the firm must sell under the new policy to make the switch worthwhile?
Select one:
a. 1,100
b. 1,027
c. 873
d. 927
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