Problem:
The Harrington Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5 percent per period. Based on the following information, what is the break-even price per unit that should be charged under the new credit policy? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Current Policy New Policy
Price per unit $104 ?
Cost per unit $47 $47
Unit sales per month 3,240 3,400
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The Harrington Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5 percent per period.
Current Policy New Policy
Price per unit $104 $108
Cost per unit $47 $47
Unit sales per month 3,240 3,295
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Calculate the NPV of the decision to change credit policies. (Do not round intermediate calculations.)