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gardner company currently makes all sales on credit and offers no cash discount. The firm is considering offering a 2% cash discount for payment within
gardner company currently makes all sales on credit and offers no cash discount. The firm is considering offering a 2% cash discount for payment within 15 days. The firms current current average collection period Is 60 days, Sales or 40,000 units, selling price is $43 per unit, and variable cost per unit is $33. The firm expects that the change in credit terms will result in an increase in sales to 43,000 units, that 70% of the sales will take the discount, and that the average collection period Will fall to 30 days. if the firms required rate of return on equal-risk investments is 10%, should the proposed discount be offered? (assume a 365 day year)
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