Robinson Rollingpin Corporation has variable cost per unit of $.35 per $1 of sales. The firm offers a 2% discount for orders paid within 15 days if the customer increases their order size by 5%. A customer normally orders $75,000, and is considering the discount. Normally, the customer pays within 30 days with no discount. Robinson's cost of debt capital is 12%. Would Robinson be wise to offer the discount? Calculate the NPV of the decision.

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The Answer of Robinson Rollingpin Corporation has variable cost per unit of $.35 per $1 of sales. The firm offers a 2% discount for orders paid within 15 days if the customer increases their order size by 5%. A customer normally orders $75,000, and is considering the discount. Normally, the customer pays within 30 days with no discount. Robinson's cost of debt capital is 12%. Would Robinson be wise to offer the discount? Calculate the NPV of the decision.

Robinson Rollingpin Corporation Has Variable Cost Per Unit of