Business, 07.05.2021 16:30 haley4023

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 45 to 36 days. Bad-debt expenses are expected to decrease from 1.5% to 1% of sales. The firm is currently selling 12,000 units but believes that sales will decline to 10,000 units as a result of the proposed change. The sale price per unit is $56, and the variable cost per unit is $45. The firm has a required return on equal-risk investments of 12%. Evaluate this decision, and make a recommendation to the firm.

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A firm is contemplating shortening its credit period from 40 to 30 days and believes that, as a resu...

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