Q#2

Details	Present Plan	Plan A	Plan B
Credit term	2/10 n /30	2/10 n/ 40	2/10 n / 60
Total sales	100 millions	5%	10%
Amount received in discount period	25 millions	25 millions	25 millions
Investment cost	10 % of receivables	10 % of receivables	10 % of receivables
Profit rate	20 % of sales	20 % of sales	20 % of sales
Bad debts cost	2 % of sales	2 % of sales	2 % of sales
Cash Sales	10 millions	10 millions	10 millions

• Should company change the credit term or not?