Question
**Need break even qty for new credit policy** The Harrington Corporation is considering a change in its cash-only policy. The new terms would be net
**Need break even qty for new credit policy**
The Harrington Corporation is considering a change in its cash-only policy. The new terms would be net one period. Based on the following information, determine if Harrington should proceed or not. The required return is 2.5 percent per period.
|
| Current Policy | New Policy |
| Price per unit | $ 86.00 | $ 88.00 |
| Cost per unit | $ 47.00 | $ 47.00 |
| Unit sales per month | 3510 | 3620 |
|
|
|
|
New= (88-47) 3620 = $148,420
Old= (86-47)3510 =$136,890.
Yes, proceed with the change because it will get more margins.
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Probability For Risk Management
Authors: Matthew J. Hassett, Donald G. Stewart
2nd Edition
156698548X, 978-1566985482
