McQueen Products is evaluating its credit policy. The current policy is as follows: 3/10, net 40 Annual sales = 600.000 units Cash sales (qualify for the discount) = 15% 55% pay on the 10th day 30% pay on 50th day Unit sales price = $44 Unit Variable cost = $30 Bad Debts are 1.5% of credit sales The proposed policy would be as follows: 4/10, net 60 Annual sales = 800,000 units Cash sales (qualify for the discount) = 5% 35% pay on the 10th day 60% pay on 70th day Unit sales price = $38 (new sales price) Unit Variable cost = $26 (new VC) Bad Debts are 3.50% of credit sales The banker would finance the working capital requirement at 23%. The banker would provide any investment opportunities at 15%. Should the new policy be implemented? McQueen Products is evaluating its credit policy. The current policy is as follows: 3/10, net 40 Annual sales = 600.000 units Cash sales (qualify for the discount) = 15% 55% pay on the 10th day 30% pay on 50th day Unit sales price = $44 Unit Variable cost = $30 Bad Debts are 1.5% of credit sales The proposed policy would be as follows: 4/10, net 60 Annual sales = 800,000 units Cash sales (qualify for the discount) = 5% 35% pay on the 10th day 60% pay on 70th day Unit sales price = $38 (new sales price) Unit Variable cost = $26 (new VC) Bad Debts are 3.50% of credit sales The banker would finance the working capital requirement at 23%. The banker would provide any investment opportunities at 15%. Should the new policy be implemented