Question
QUESTION 2 [8 MARKS] INFORMATION Premier International Limited expects to sell 3 000 desk fans at a price of R300 per unit. The cost to
QUESTION 2 [8 MARKS] INFORMATION Premier International Limited expects to sell 3 000 desk fans at a price of R300 per unit. The cost to manufacture each fan is R200. If the sales are made on credit, collection costs of approximately R5 per unit sold will be incurred. The cost of capital to the company is 12%. REQUIRED: (Round amounts to the nearest Rand) Calculate the profit to Premier International Limited if:
2.1 All the sales are on credit and the accounts are paid in 60 days (4 Marks)
2.2 All the sales are on credit and a 5% discount is granted if the accounts are paid in 20 days. Suppose that 60% of customers pay their accounts within 20 days.
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