Sanchez, Incorporated, is considering a change in its cash-only sales policy. The newterms of sale would be net one month. The required return is 2 percent per month.CurrentNew PolicyPolicyPrice per unit$1,000$1,000Cost per unit$550$550Unit sales per month1,4001,500Based on the above information, determine the NPV of the new policy.Multiple Choice$795,000.00O$795,000.00$3,545,000.00O$3,545,000.00$2,160,000.00$2,160,000.00$1,575,000.00$826,800.00

Cost of switching = Price per unit * Current Quantity sold per month + Cost per unit*(New unit sales…

Answered: Sanchez, Incorporated, is considering a…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Under its current cash sales-only policy JJ sells 186 units per month at a price of $330. the variable costs per unit $155 and the monthly interest rate is 1.3%. The firm believes it can sell an additional 25% per month if it offers a net 30 credit policy. What is the net present value of the switch using the one-shot approach A. $291,543 B. $271,283 C. $312,806 D. $288,946 E. $311,118

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