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SHOW DETAILED WORKING Discount Policy . The Stillwell Company presents the following information: Current annual credit sales: $36,000,000 Collection period: 2 months Terms: net/40 Rate

SHOW DETAILED WORKING

Discount Policy. The Stillwell Company presents the following information:

Current annual credit sales: $36,000,000

Collection period: 2 months

Terms: net/40

Rate of return: 18%

The company is considering offering a 5/10, net/40 discount. It anticipates that 50 percent of

its customers will take advantage of the discount. The collection period is expected to decrease to 1 month.

Required : Evaluate whether or not the discount policy be implemented?

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