Solution-Is change good idea if required return two percent

Is change good idea if required return two percent

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Problem 1: ABC Corp is considering a change in credit policy. The current policy is cash only, and sales per period are 2,000 units at a price of P110. If credit is offered the new price will be P120 per unit, and the credit will be extended for one period. Unit sales are not expected to change, and all customers are expected to take credit. The firm anticipated that 4% of its customers will be in default. If the required return is 2% per period, is the change a good idea? What if only half of the customers take the offered credit? Justify.

Reference no: EM132889548

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Is change good idea if required return two percent

Reference no: EM132889548

Reference no: EM132889548

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