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Kim Mitchell, the new credit manager of the Vinson Corporation, was alarmed to find that Vinson sells on credit terms of net 9 0 days
Kim Mitchell, the new credit manager of the Vinson Corporation, was alarmed to find that Vinson sells on credit terms of net days while industrywide credit terms have recently been lowered to net days. On annual credit sales of $ million, Vinson currently averages days of sales in accounts receivable. Mitchell estimates that tightening the credit terms to days would reduce annual sales to $ but accounts receivable would drop to days of sales and the savings on investment in them should more than overcome any loss in profit. Vinsons variable cost ratio is taxes are and the interest rate on funds invested in receivables is Assuming a day year, calculate the cost of carrying receivables under the current policy and the new policy. Enter your answers as positive values. Do not round intermediate calculations. Round your answers to the nearest dollar.
Current policy: $
New policy: $
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