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Detailed solution required urgently in 10 mins....Will downvote if solution is not sufficiently explained. A trader whose current sales are in the region of 7
Detailed solution required urgently in 10 mins....Will downvote if solution is not sufficiently explained.
A trader whose current sales are in the region of 7 6 lakhs per annum and an average collection period of 30 days wants to pursue a more liberal policy to improve sales. A study made by a management consultant reveals the following information:- Credit Policy Increase in Increase in sales Present default collection period Anticipated A 10 days 30,000 1.5% B 20 days 48,000 2% 30 days 375,000 3% D 45 days 90,000 4% The selling price per unit is 3. Average cost per unit is * 2.25 and variable costs per unit are 2 The current bad debt loss is 1%. Required return on additional investment is 20%. Assume a 360 days year. Which of the above policies would you recommend for adoptionStep by Step Solution
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