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Use the information for Q6 and Q7: A seller is considering extending trade credit to an existing customer that buys on cash terms. The customer
Use the information for Q6 and Q7: A seller is considering extending trade credit to an existing customer that buys on cash terms. The customer has just placed a sales order (cash terms) for immediate delivery of 400 units at a sales price per unit of $100. The customer states that they will increase their sales order by 10 units if they receive a 90-day credit period. Variable costs are $65 per unit and involve an immediate cash outflow. If the seller has an annual opportunity cost rate of 7.3%. 6. What is the NPV of extending credit to the customer? NPV=$ Question 7 1pts 7. At what sales quantity will the seller break-even (from an NPV perspective) by extending credit to the customer? (Please note: Excel function is not allowed in exam. Set PVcash=PVcredit then solve for Qcredit ) Qcredit = unites (Round up to the nearest whole number)
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