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24 November, 10:43

Home Accents currently sells 219 units a month at a price of $46 a unit. If it switches to a net 30 credit policy, monthly sales are expected to increase by 28 units. The monthly interest rate is. 57 percent and the variable cost per unit is $21. What is the net present value of the proposed credit policy switch?

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  1. 24 November, 13:12
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    Net Present Value per month = $696.03

    Explanation:

    The net present value is the difference between the present value of cash inflows and the present value of net cash flow

    Operating cash flow = (46-21) * 28 = 700

    Net present value per month = 700 * 1.0057 ^ (-1)

    =$696.03
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Home » Business » Home Accents currently sells 219 units a month at a price of $46 a unit. If it switches to a net 30 credit policy, monthly sales are expected to increase by 28 units. The monthly interest rate is. 57 percent and the variable cost per unit is $21.
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