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Answer asap = Homework: Chapter 14 Homework Question 7, P14-12 (simi... Part 1 of 5 HW Score: 48.75%, 4.88 of 10 points * Points: 0
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= Homework: Chapter 14 Homework Question 7, P14-12 (simi... Part 1 of 5 HW Score: 48.75%, 4.88 of 10 points * Points: 0 of 1 0 Save Shortening the credit period A fimm is contemplating shortening its credit period from 40 to 30 days and believes that, as a result of this change, its average collection period will decline from 44 to 36 days. Bad-debt expenses are expected to decrease from 1.5% to 0.9% of sales. The firm is currently selling 11,800 units but believes that as a result of the proposed change, sales will decline lo 9,700 units. The sale price per unit is $56, and the variable cost per unit is $45. The firm has a required return on equal-risk investments of 24.9%. Evaluate this decision, and make a recommendation to the firm. (Note: Assume a 365-day year.) The reduction in profit contribution from a decline in sales is $ (Round to the nearest dollar. Enter as a negative number.)Step by Step Solution
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