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Your company is considering whether to extend 30 day terms on a credit sales to major customers on sales of $1,000. It typically costs you
Your company is considering whether to extend 30 day terms on a credit sales to major customers on sales of $1,000. It typically costs you $0.70 for each dollar of sales. It will cost $0.02/dollar to check the customers credit and about $0.02/dollar in administrative collection costs. Your companys annual WACC is 13%, and you expect the customers to pay in 30 days. What is the NPV of extending this credit sale?
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