Udar limited is considering a change in its credit terms from 2/10 net 30 to 3/10 net 45, change is expected to: a) increase total sales from 50 million to 60 million. b) decrease the proportion of customers taking discount from 70% to 60%. c) increase average collection period from 20 days to 24 days. The gross profit margin for the firm is 15% and cost of capital is 12%.The rate is 40%. Calculate the expected change in residual income

Udar limited is considering a change in its credit terms from 2/10 net 30 to 3/10 net 45, change is expected to: a) increase total sales from 50 million to 60 million. b) decrease the proportion of customers taking discount from 70% to 60%. c) increase average collection period from 20 days to 24 days. The gross profit margin for the firm is 15% and cost of capital is 12%.The rate is 40%. Calculate the expected change in residual income

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 12PROB

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