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ABC Corp currently offers standard terms of 1/10 net 30.It has an average collection period of 25 days and 50% of customers take advantage of
ABC Corp currently offers standard terms of 1/10 net 30.It has an average collection period of 25 days and 50% of customers take advantage of the discount.They are considering a new credit policy of 3/15 net 60.They expect the new policy to increase sales from $900,000 to $1,200,000.The new policy should result in 80% of customers taking advantage of the discount and an average collection period of 28 days.Its contribution margin would remain at 10% and its short term cost of financing is 10% Should the new policy by implemented?
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