The new policy would involve extending credit for one

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The Cold Fusion Corp. (manufacturer of the Mr. Fusion home power plant) is considering a new credit policy. The current policy is cash only. The new policy would involve extending credit for one period. Based on the following information, determine if a switch is advisable. The interest rate is 2.0 percent per period.


Current Policy

New Policy

Price per unit

$ 175

$ 175

Cost per unit

$ 130

$ 130

Sales per period in units

1,000

1,100

Reference no: EM13483894

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