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incorrect answer straight away report against answer....10 down votes A A trader whose current sales are in the region of 26 lakhs per annum and

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incorrect answer straight away report against answer....10 down votes

A A trader whose current sales are in the region of 26 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:- Increase in sales Present default Increase in Credit Policy collection period anticipated 10 days 30,000 1.5% 20 days 48,000 B 2% C 30 days 75,000 3% 45 days 90,000 4% The selling price per unit is 33. Average cost per unit is 32.25 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 adoption? D

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