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New Environment manufactures solar batteries for electric bicycles. Given the advantages in terms of savings, the management of the company estimates that if starts to
New Environment manufactures solar batteries for electric bicycles. Given the advantages in terms of savings, the management of the company estimates that if starts to give its costumers two months of credit, orders will be up by 750 units a month and the price can increase from 1,850 to 1,900 per unit (the variable cost is $1,740 per unit). Assuming that the cost of capital of New Environment is equal to 1.0% per months. Should New Environment adopt the new credit strategy?
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