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ABC ltd provides 45 days credit to its customers. Present level of sales is 1,50,00,000. Cost of capital is 15%. Variable cost to sales is
ABC ltd provides 45 days credit to its customers. Present level of sales is 1,50,00,000. Cost of capital is 15%. Variable cost to sales is 0.80. Company is considering extending its credit period to 60 days . Such an extension would increase the sales by Rs 15,00,000. The bad debt proportional to sales would be 5%. Calculate the increase in gross profit after the change. Note- Please solve it step by step with clear formulae to avoid any confusion.
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