Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

need help! will leave immediate feedback!
image text in transcribed
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

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Venture capital and the finance of innovation

Authors: Andrew Metrick

2nd Edition

9781118137888, 470454709, 1118137884, 978-0470454701

More Books

Students also viewed these Finance questions

Question

Identify factors that play a role in employee engagement.

Answered: 1 week ago

Question

Define ISI.

Answered: 1 week ago

Question

Describe the Indian public distribution system.

Answered: 1 week ago

Question

Write a note on AGMARK.

Answered: 1 week ago

Question

Plan merit and demerits ?

Answered: 1 week ago