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Suppose that X inc a maker of digital video disk players, is considering increasing its credit terms from net 30 to net 60.X inc believes
Suppose that X inc a maker of digital video disk players, is considering increasing its credit terms from net 30 to net 60.X inc believes the relaxing terms would increase sales. Currently, X inc's daily sales equal $100,000 and COGS represent 65% of sales. The firm's credit analysts estimate the aforementioned change in credit terms will lead to a 3% increase in sales. X inc's DIH and DPO will be invariant to the change in policy and equal 40 and 30 days, respectively. Furthermore, assume the firm's annual opportunitycost is 10%. Decide whether X inc should go ahead with the new credit policy
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