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CLARIFY Fahmi Enterprise has a cash-only sales policy. It is considering changing to a credit policy of net 30 days. Information related to the current

CLARIFY

Fahmi Enterprise has a cash-only sales policy. It is considering changing to a credit policy of net 30 days. Information related to the current and new policies is given in the table below. The required rate of return is 0.75 percent per month.

Current Policy

New Policy

Price per unit (RM)

15.00

15.50

Cost per unit (RM)

8.00

8.40

Unit sales per month

2,000

2,050

Perform an analysis to show whether or not Fahmi Enterprise should adopt the new policy?

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