Stevens Company presents the following information: Current annual credit sales : $24,000,000 Collection period : 3...

Stevens Company presents the following information:

Current annual credit sales : $24,000,000

Collection period : 3 months

Terms : net/30

Rate of return : 18%

The company is considering offering a 4/10, net/30 discount. It anticipates that 30 percent of its customers will take advantage of the discount. The collection period is expected to decrease to 2 months. How much is the net advantage/disadvantage of the planned discount policy? Should the discount policy be implemented?

Expert Solution

Advantage of planned discount policy is $72000

Conclusion:- yes the policy should be implemented.

detailed answer is given in below images.

jeff jeffy answered 2 years ago

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