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The Tropeland company has obtained the following information: Annual credit sales: $30 million Collection period: 60 days Terms: Net 30 Interest Rate: 12% The company

The Tropeland company has obtained the following information:

Annual credit sales: $30 million

Collection period: 60 days

Terms: Net 30

Interest Rate: 12%

The company is considering offering terms of 4/10 net30. It anticipates that 50% of its customers will take advantage of the discount. The collection period is expected to decrease by one month. Should the new credit policy be adopted?

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