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v Q3 (20 marks) Cash price Credit price Variable cost Quantity Monthly return Credit terms Uncollectable Existing credit policy $48.00 n/a $36.00 120 2.00% n/a

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Q3 (20 marks) Cash price Credit price Variable cost Quantity Monthly return Credit terms Uncollectable Existing credit policy $48.00 n/a $36.00 120 2.00% n/a n/a Suggested credit policy $48.00 $50.00 $36.00 120 2.00% Net 30 3.00% 1) Calculate with the steps the cost of switching. (The company is assuming that the customer will pay in 30 days else a default will be triggered) 2) Should the company switch? Justify your answer. a

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