Shortening the credit period A firm is contemplating shortening its credit period from 40 to 30...

Shortening the credit period A firm is contemplating shortening its credit period from 40 to 30 days and believes that, as a result of this change, its average collection period will decline from 46 to 35 days. Bad-debt expenses are expected to decrease from 1.7% to 0.9% of sales. The firm is currently selling 11,500 units but believes that as a result of the proposed change, sales will decline to 9,600 units. The sale price per unit is $58, and the variable cost per unit is $47. The firm has a required return on equal-risk investments of 11.7%. Evaluate this decision, and make a recommendation to the firm. (Note:Assume a 365-day year.)

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AS NOTHING WAS MENTIONED, ALL FIGURES ARE ROUNDED TO 2 DECIMALS. THANK YOU

jeff jeffy answered 10 months ago

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