Under Its Current Cash Sales Only Policy Willard's Co

Under its current cash sales only policy Willard's Co. sells 176 units a month for a total sales value of $11,848. The variable cost per unit is $33 and the monthly interest rate is 1.1 percent. The firm should sell an additional 25 units per month if it offers a net 30 credit policy. What is the present value of the proposed switch using the accounts receivable approach?

A) $55,976
B) $65,323
C) $69,081
D) $70,224
E) $73,566

Correct Answer:

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