1)  Your firm is considering a new credit policy

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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