Epstein Company, a wholesale distributor of jewelry, sells to retail jewelry stores on terms of net 120.
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Epstein Company, a wholesale distributor of jewelry, sells to retail jewelry stores on terms of “net 120.” Its average collection period is 150 days. The company is considering the introduction of a 4 percent cash discount if customers pay within 30 days.
Such a change in credit terms is expected to reduce the average collection period to 108 days. Epstein expects 30 percent of its customers to take the cash discount.: L01
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