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Madden Minerals has annual credit sales of $600,000 with terms of n/30, which is also the average collection period. The company is considering offering terms

Madden Minerals has annual credit sales of $600,000 with terms of n/30, which is also the average collection period. The company is considering offering terms of 2/10, n/30. The company estimates that this would increase sales by 15% and reduce the average collection period to 12 days. 90% of customers would be expected to take the discount. Madden has a profit margin of 15% and gets a return on its assets of 16%. Should Madden offer the discount?

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