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Can someone show me how to do this problem? Will give a thumb up for good response, thanks! 5.JBN Inc. is a cash only business.
Can someone show me how to do this problem? Will give a thumb up for good response, thanks!
5.JBN Inc. is a cash only business. In order to boost sales, management are considering introducing a policy giving the customers 30 days trade credit. The company currently sells an average of 2,000 units of its product per month at a price of $10 per unit. The average variable cost of producing each unit is $9. Under the proposed policy, management expect to increase sales by 10% to 2,200 units per month. The firm's cost of funds is 12% per year. If adopted, the new policy would take effect April 1, 2021. a. Based upon this information, complete the template below: Forecast April Forecast May Forecast June Current policy Collections Payments Net cash Forecast April Forecast May Forecast June Proposed policy Collections Payments Net cash Difference b. Based upon this analysis, would you recommend adoption of the new policy? ExplainStep by Step Solution
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