Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Microbiotics currently sells all of its frozen dinners cash - on - delivery but believes it can increase sales by offering supermarkets 1 month of
Microbiotics currently sells all of its frozen dinners cashondelivery but believes it can increase sales by offering supermarkets month of free credit. The price per carton is $ and the cost per carton is $ The unit sales will increase from cartons to per month if credit is granted. Assume all customers pay their bills and take full advantage of any credit period offered.
a If the interest rate is per month, what will be the change in the firm's total monthly profits on a present value basis if credit is offered to all customers?
Note: Do not round intermediate calculations. Round your answer to decimal places.
b If the interest rate is per month, what will be the change in the firm's total monthly profits on a present value basis if credit is offered to all customers?
Note: Do not round intermediate calculations. Round your answer to decimal places. Negative amount should be indicated by a minus sign.
c Assume the interest rate is per month but the firm can offer the credit only as a special deal to new customers, while existing customers will continue to pay cash on delivery. What will be the change in the firm's total monthly profits on a present value basis under these conditions?
Note: Do not round intermediate calculations. Round your answer to decimal places.
a Change in total monthly profit
b Change in total monthly profit
c Change in total monthly profit
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started