question archive 1)Your firm is considering a new credit policy

1)Your firm is considering a new credit policy

Subject:AccountingPrice: Bought3

1)Your firm is considering a new credit policy. While its 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 if the interest rate is 2.0 percent per period.
Current Policy          New Policy
           Price per Unit                                                 Tshs    1,750              Tshs    1,750
           Cost per Unit                                                 Tshs    1,300              Tshs    1,300
           Sales per Period (Units)                                             10,000                        11,000

 

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