COMM 2202 Lecture Notes - Lecture 20: Credit Analysis, Forego, To Anyone
13 Dec 2018
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****we assume customers pay either on the 10th day (1), or the 45th day (2) If it costs them more than 23. 45% to borrow the money to pay, not worth it. If it costs them less than 23. 45%, they will most likely take the discount. Allows you to get an idea of which customers will pay at which time. What is the optimal level of accounts receivable. Negative: cash discount some customers will pay early and pay less than the full sales price positive or negative. Bad there are no positives or bene ts. Your company is evaluating a switch from a cash only policy to a net 30 policy. The price per unit is and the variable cost per unit is . The company currently sells 1,000 units per month. Under the proposed policy the company will sell 1,050 units per month (good they"re selling extra units). Pv(0) = 60,000/0. 015 (gives you value at time 1) + 60,000.
