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Microbiotics currently sells all of its frozen dinners cash on delivery but believes it can increase sales by offering supermarkets 1mon of free credit. The
Microbiotics currently sells all of its frozen dinners cash on delivery but believes it can increase sales by offering supermarkets 1mon of free credit. The price per carton is $110, and the cost per carton is $70. The unit sales will increase from 1,060 cartons to 1120 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 1% 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? (Do not round Intermedlate colculations. Round your answer to 2 decimal places.) Change in total monthly profit b. If the interest rate is 1.5% per month, what will be the change in the firm's total monthly profits on a present value basis if credt is offered to all customers? (Do not round Intermedlate calculations. Round your answer to 2 decimal places. Negative amount should be Indlcated by a minus sign.) Change in total monthly proft ces c. Assume the interest rate is 1.5% 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 firms total mont under these conditions? (Do not round Intermedlate calculations. Round your onswer to 2 decimal places.) hy profits on a present value basis Change in total monthly profe Pre 2 of 4 i Next >
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