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please include calculations for answers as well. Sunshine Hippos has a credit collection problem. Last year it took an average of 67 days for customers
please include calculations for answers as well.
Sunshine Hippos has a credit collection problem. Last year it took an average of 67 days for customers to pay They are planning on changing their credit policy from net 60 to 1/15, net 60. They believe that 79% of customers will take advantage of the discount, reducing the average collection period to an expected 37 days. The company can generate a return of 10% on any cash freed up. Sunshine expects that the new discount will increase sales from the current $2,200,000 to $2,600,000. Their profit margin will remain at 9%, Should the company adopt the policy? Support your answer by calculating the below. Round below answers to nearest Whole number(eg. 1,355). If your answer is an increase to net income, enteros positive. If your answer is a decrease to net incomc, enter it as a negative using a negative son A) New Accounts Receivable: $ B) Old Accounts Receivable: $ What is the change in cash flow that will result from the above change in a/r $ D) What is the change in net income due to the change of cash flow only (i.e. return on investments E) What is the change in net income due to the change in sales only? $ F) What is the change in net income due to the discount only? $ F) What is the total change in net income related to the change in policies? $ G) Based on your answer to Part F, which policy would you choose? Type "O" for the old policy or "N" for the new policyStep by Step Solution
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