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need help! will leave immediate feedback! Zapdash Electric Vehicles is considering a change to its credit policy. It will hire a collections agency to collect
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Zapdash Electric Vehicles is considering a change to its credit policy. It will hire a collections agency to collect its accounts receivable, which will have the following effects: Bad debts will fall by 58% Expenses will rise by $515,000 Sales will rise by $190,000 The IRR of the change is 12.6% The NPV of the change is -$42,000 Days Sales Outstanding will fall from 53 days to 42 days Should Zapdash approve the change? Yes, because bad debts will fall by 58%, increasing Zapdash's collection rate Yes, because the Days Sales Outstanding change will reduce the Cash Conversion Cycle by 11 days No, because expenses will rise by $515,000 due to the cost of hiring the agency No, because the NPV of the change is negative No, because sales will only rise by $190,000, which is less than the increase in expenses Step by Step Solution
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