Solution-Implementation of new credit policy

Implementation of new credit policy

Reference no: EM13214959

The Imperial Sugar Company, located in Honolulu, Hawaii has determined that by implementing a new policy in its credit terms, it could potentially increase its NPV from $0.40 per day to $0.50 per day. Assume a 365 day year. Complete parts (a) and (b) below:

(a) Assume that the company's annual opportunity cost of capital is 6%. How much of an increase, if any, would the shareholders of the company realize from the implementation of this new credit policy? Do not round your intermediate steps. Round your financial answer to two decimal places.

(b). Consider that while the company is making its decision, the opportunity cost rises to 7.25%. Recalculate part (a) using the new 7.25% rate.

Reference no: EM13214959

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Implementation of new credit policy

Reference no: EM13214959

Reference no: EM13214959

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