31 14 Credit terms Until recently, Augean Cleaning Products sold its products on terms of net 56, with an average collection period of 71 days In an attempt to induce customers to pay more promptly, it has changed its terms to 3 10, EOM, net 56 Assume current sales of $100, costs of $76, an interest rate of 10 , and no defaults Assume each month has 30 days and a year has 360 days The initial effect of the changed terms is as follows Average Collection Periods (Days) Percent of Sales with Cash Discount Cash Discount Net 56 26a 76 aSome customers deduct the cash discount even though they pay after the specified date Calculate the NPV per $100 of sales based

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31 14 Credit terms Until recently, Augean Cleaning Products sold its products on terms of net 56, with an average collection period of 71 days  In an attempt to induce customers to pay more promptly, it has changed its terms to 3 10, EOM, net 56  Assume current sales of $100, costs of $76, an interest rate of 10 , and no defaults  Assume each month has 30 days and a year has 360 days  The initial effect of the changed terms is as follows  Average Collection Periods (Days) Percent of Sales with Cash Discount Cash Discount Net 56 26a 76 aSome customers deduct the cash discount even though they pay after the specified date  Calculate the NPV per $100 of sales based

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31-14 Credit terms Until recently, Augean Cleaning Products sold its products on terms of net 56, with an average collection period of 71 days. In

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