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Shortening the credit period A firm is contemplating shortening its credit period from 30 to 20 days and believes that, as a result of this
Shortening the credit period A firm is contemplating shortening its credit period from 30 to 20 days and believes that, as a result of this change, its average collection period will decline from 34 to 25 days. Bad-debt expenses are expected to decrease from 1.7% to 1.1% of sales. The firm is currently selling 12,400 units but believes that as a result of the proposed change, sales will decline to 10,300 units. The sale price per unit is S54, and the variable cost per unit is $46. The firm has a required return on equal-risk investments of 24.6%. Evaluate this decision, and make a recommendation to the firm. (Note: Assume a 365-day year.) The reduction in profit contribution rom a decline in sales is $L Round to the nearest dollar Enter as a negative number
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