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Block Island Products currently sells 485 units a month at a price of $81 a unit. The firm believes it can increase its sales by

Block Island Products currently sells 485 units a month at a price of $81 a unit. The firm believes it can increase its sales by an additional 47 units if it switches to a net 30 credit policy. The monthly interest rate is .25 percent and the variable cost per unit is $33.75. What is the incremental cash inflow from the proposed credit policy switch?

Multiple Choice

  • $1,885

  • $2,221

  • $2,178

  • $3,318

  • $3,375

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