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Please show step by step Your company is evaluating a switch from a cash- only policy to a net 30 policy. The price per unit
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Your company is evaluating a switch from a cash- only policy to a net 30 policy. The price per unit is $100, and the variable cost per unit is $40. The company currently sells 1,000 units per month. Under the proposed policy, the company expects to sell 1,050 units per month. The required monthly return is 1.5%. What is the CF under the oldew policy? What is the cost of switching? Cost of switching = PQ + v(Q'-Q) What is the NPV of the switch? Should the company offer credit terms of net 30?
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