Microbiotics currently sels all of its frozen dinners cash o

Microbiotics currently sels all of its frozen dinners cash on delivery but belleves it can increase sales by offering supermarkets 1 month of free credit The price per carton is $130, and the cost per carton is $80 The unit sales will increase from 1080 cartons to 1140 pes month if credit is granted. Assume all customers pay their bills and take full advantage of any credit period offered a. If the interest rate is 1% per month, what will be the change in the firm offered to all customers? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Change in total monthly profit m b. \'f the interest rate is 1.5% per month, wiat will be the change in the firm\'s total monthly profits on 8 present value ben roets offered to all customers? (Do not round intermediate calculations. Round your answer to 2 decimal places. Negetive amount should be indicated by a minus sign.) Change in total monthly prof . Assume the interest rate is 15% per month but the firm can offer tne credit only as a special dea to neo customers whe easting customers wi continúe to pay cash on delivery What wil be the change in the fim\'s total monthiy profts on a present value basis under these conditions? (Do not round Intermediote celculations. Round your answer to 2 decimal pleces) Change n total monthly proft ?

Solution

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Existing Profit Per Unit Total Month Sale 130 140400 Less: Variable Cost 80 86400 Contribution Margin 50 54000 a. PV of Revenue-Cost (130/1.01)-80                   48.71 Existing Profit Profit after Credit Change in Monthly profit 50*1080 48.71*1140 54000 55529 1529 b. PV of Revenue-Cost (130/1.015)-80                   48.08 Existing Profit Profit after Credit Change in Monthly profit 50*1080 48.08*1140 54000 54811 811 c. PV of Revenue-Cost (130/1.015)-80                   48.08 Existing Profit Profit after Credit Change in Monthly profit 50*1080 50*1080 48.08*60 48.08*60 54000 54000 2885 Total 54000 56885 2885