Question
Your company expects to sell 10,000 units at $500 each this month. Your company does not have a credit policy, but is considering implementing one.
Your company expects to sell 10,000 units at $500 each this month. Your company does not have a credit policy, but is considering implementing one. The price would remain the same, but you would allow customers to pay one month after the purchase date. Your team expects this program to increase the number of units sold by 5%. However, under this policy your team also expects 5% of the customers to never pay. These unpaid accounts would immediately be sold to a debt collector at the end of the month, and you would collect 40% of the amount due. The monthly discount rate is 2%. What will be the expected change in revenue if you implement this credit policy? Round your answer to the nearest dollar.
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