Question

The ICU Binocular Corporation is considering a change in credit policy. The current policy is cash only, and sales per period are 5,000 units at a price of $95. If credit is offered, the new price would be $100 per unit and the credit would be extended for one period. Unit sales are not expected to change, and all customers would take the credit. ICU anticipates that 2% of its customers will default. If the required return is 3% per period, is the change a good idea? What if only half the customers take the offered credit?

          The ICU Binocular Corporation is considering a change in credit policy. The current policy is cash only, and sales per period are 5,000 units at a price of $95. If credit is offered, the new price would be $100 per unit and the credit would be extended for one period. Unit sales are not expected to change, and all customers would take the credit. ICU anticipates that 2% of its customers will default. If the required return is 3% per period, is the change a good idea? What if only half the customers take the offered credit?

Added by Alba P.

Question

Please give Ace some feedback