Shortening the credit period A firm is contemplating
shortening its credit period from 45 to 35 days
and believes that, as a result of this change, its
average collection period will decline
from 52 to 42 days. Bad-debt expenses
are expected to decrease from 1.7% to 0.9% of
sales. The firm is currently selling 11,600 units but
believes that as a result of the proposed change, sales will
decline to 9,700 units. The sale price per unit
is $56, and the variable cost per unit
is $44. The firm has a required return onequal-risk
investments of 11.5%. Evaluate this decision, and
make a recommendation to the firm. (Note: Assume
a 365-day year.)
Shortening the credit period A firm is contemplating shortening its credit period from 45 to 35 days and believes tha
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answerhappygod
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