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Initiating a cash discount???Gardner Companycurrently makes all sales on credit and offers no cash discount.The firm is considering offering a 33?% cash discount for paymentwithin 15 days. The? firm's current average collection period is 60days, sales are 40,000 ?units, selling price is $47 per? unit, andvariable cost per unit is $31. The firm expects that the change incredit terms will result in an increase in sales to 43,000 ?units,that 70?% of the sales will take the? discount, and that theaverage collection period will fall to 30 days. If the? firm'srequired rate of return on? equal-risk investments is 10?%, shouldthe proposed discount be? offered????(Note?:Assume a?365-day year.)
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