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What is the net present value of proposed change

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1. Wabistics offers terms of 2/15 net 45. What effective annual interest rate does the firm earn when the customer does not take the discount? What effective annual interest rate does the firm earn when each of the following changes is made? Consider each change in isolation, not together. A. The discount is changed to 4%. B. The credit period is increased to 60 days. C. The discount period is increased to 20 days.

2. Vesulvios currently has a cash only policy but is considering going to a net 30 days policy. Its sale price per unit is $125 and its variable cost per unit is $96. It currently sells 1,320 units per month, and believes that under the new policy it will sell 1,350 units per month. The required return is 0.95% per month. What is the net present value of this proposed change? Should the company make it?

Reference no: EM132345896

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