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Question 2: (30 marks) Covehead Lighthouse Corporation is considering a change in its cash-only policy. The new terms would be net one period. Based on

Question 2: (30 marks)

Covehead Lighthouse 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 Covehead Lighthouse should proceed or not. The required rate of return is 2.5% per period.

Current Policy

New Policy

Price per unit

$73

$75

Cost per unit

$38

$38

Unit sales per month

3,280

3,390

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