Question 20.S-TP.1: Credit Policy The Cold Fusion Corp. (manufacturer of the Mr....

Fundamentals of Corporate Finance Standard Edition

Credit Policy The Cold Fusion Corp. (manufacturer of the Mr. Fusion home power plant) is considering a new credit policy. The current policy is cash only. The new policy would involve extending credit for one period. Based on the following information, determine if a switch is advisable. The interest rate is 2.0 percent per period:

New Policy	Current Policy
$175	$175	Price per unit
$130	$130	Cost per unit
1,100	1,000	Sales per period in units

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