The Harrington Corporation is considering a change in its cash-only policy. The

Question

The Harrington Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.0 percent per period. Based on the following information, what is the break-even price per unit that should be charged under the new credit policy? (Round your answer to 2 decimal places. (e.g., 32.16))

Please don`t use calculations of others for this particular question cos they were incorrect

value: 0.00 points The Harrington Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.0 percent per period. Based on the following information, what is the break-even price per unit that should be charged under the new credit policy? (Round your answer to 2 decimal places. (e.g., 32.16)) Current PolicyNew Policy Price per unit Cost per unit Unit sales per montih $ 82 $ 42 3,800 $ 42 4,000 Break-even price

Explanation / Answer

Harrington Corporation details Amt $ Current status Sales price                                        82 Cost                                        42 Units per month                                  3,800 Total revenue                             311,600 Total cost                             159,600 Net income                             152,000 Return % 48.78% Under new credit policy return on credit 2% Total Return required 50.78% Situation in Break even with new credit policy Units sold                                  4,000 Cost of 4000 units =                             168,000 To consider break even sales price let'assume it is x revenue = 4000*x Required return for credit =2%= 4000*x*0.02 so, 4000*x-168000=0.02x*4000 x=42.857 So Break even sales price/unit $                              42.86

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