Phoenix Lambert currently sells its goods cash on delivery. However, the financial manager believes that by offering

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Phoenix Lambert currently sells its goods cash on delivery. However, the financial manager believes that by offering credit terms of 2/10 net 30 the company can increase sales by 4 percent, without significant additional costs. If the interest rate is 6 percent and the profit margin is 5 percent, would you recommend offering credit? Assume first that all customers take the cash discount. Then assume that they all pay on day 30.

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Principles of Corporate Finance

ISBN: 978-0072869460

7th edition

Authors: Richard A. Brealey, Stewart C. Myers

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