Problem:
Cape May products sell 100 units a month at a price of $237 a unit. The firm believes it can increase sales by an additional 37 units if it switches to a net 30 policy. The monthly interest rate is .3 percent and the variable cost per unit is $167.
Required:
Question 1: What is the incremental cash inflow from the proposed credit policy switch?
A. 2590
B. 9590
C. 3367
D. 4900
E. 7000
Note: Provide support for your rationale.