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Fizzy Animators, Inc. currently makes all sales on credit and offers no cash discount. The firm is considering a 2 percent cash discount for payment
Fizzy Animators, Inc. currently makes all sales on credit and offers no cash discount. The firm is considering a percent cash discount for payment within days. The firm's current average collection period is days, sales are films per year, selling price is $ per film, variable cost per film is $note the variable cost is The firm expects that the change in credit terms will result in an increase in sales of films per year, that percent of the sales will take the discount, and the average collection period will drop to days. The firm's required return on equalrisk investments is percent. Assume a day year.
What is the firm's marginal contribution margin from sales under the proposed plan of initiating the cash discount?
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