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What is the monthly npv of the decision to offer credit

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Reference no: EM132672341

Problem 1: You company is trying to decide whether or not to offer 30-day trade consumer credit. Doing so should increase monthly sales by $10,000, but is will also increase upfront cost by $2,000 per month. In addition, only 80% of customers are expected to pay on time, while another 10% are expected to pay one month late. The remaining 10% are unlikely to pay at all. What is the monthly $NPV of the decision to offer credit, if the required rate of returns is 6% p.a. with monthly compounding?

A. $6,950
B. $7,278
C. $7,300
D. $7,110
E. None of the other answers is correct

Reference no: EM132672341

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