Microbiotics currently sells all of its frozen dinners cash on delivery but believes it can increase sales by offering supermarkets 1 month of free credit. The price per carton is $70, and the cost per carton is $50. The unit sales will increase from 1,020 cartons to 1,080 per month.
a.
If the interest rate is 1% per month, and all customers will pay their bills, calculate the present value of per carton. (Do not round intermediate calculations. Round your answer to 3 decimal places.)
Present value $ per carton
b.If the interest rate is 1.5% per month, and all customers will pay their bills, calculate the present value of per carton. (Do not round intermediate calculations. Round your answer to 3 decimal places.)
Present value $ per carton
c.If the interest rate is 1.5% per month but the firm can offer the credit only as a special deal to new customers, while old customers will continue to pay cash on delivery, calculate the present value of per carton. (Do not round intermediate calculations. Round your answer to 3 decimal places.)
Present value $ per carton
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