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What is the monthly npv of the decision to offer credit

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Reference no: EM132883080

Problem 1: Maxted Autoparts is considering whether to offer 30-day trade credit to its customers. Doing so will increase monthly sales by $25,000, but it will also increase upfront costs by $10,000 per month. In addition, only 50% of customers are expected to pay on time, while another 40% 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 Maxted's required rate of return is 6% p.a. with monthly compounding?

Reference no: EM132883080

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