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    Credit Terms

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    The Dunstill company has obtained the following information:
    · Annual Credit Sales= 30 million
    · Collections period is= 60 days
    · Credit terms= Net 30 days
    · Interest rate = 12%
    The company is considering changing it's credit terms to 4/10 net 30. The company anticipates 50% of the customers will take advantage of this policy and that the collection period will drop by 30 days. Should the company make this change?

    © BrainMass Inc. brainmass.com October 1, 2020, 10:25 pm ad1c9bdddf
    https://brainmass.com/business/credit-management-credit-policy-analysis-and-risk/credit-terms-223610

    Solution Preview

    The Dunstill company has obtained the following information:
    · Annual Credit Sales= 30 million
    · Collections period is= 60 days
    · Credit terms= Net 30 days
    · Interest rate = 12%
    The company is considering changing it's credit terms to 4/10 net 30.  The ...

    Solution Summary

    The solution evaluates a change in credit policy.

    $2.19

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