Question 22 Not yet answered Marked out of 3.125 Flag question Question text Currently, ABC...
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Question 22
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Currently, ABC Ltd sell only on credit and do not offer cash discounts. Management is considering offering a 3% discount for payment within 20 days. Currently, the average collection period is 50 days, sales are 20,000 units, selling price is $80 per unit, and variable cost per unit is $30. If the discount is implemented, it is expected that sales will increase to 22,000 units, that 60% of sales will take the discount, and the average collection period will fall to 30 days. The firm's required rate of return is 10%. What is the net benefit/loss from implementing the proposed plan? Note, use a 365-day year.
Select one:
a. $96,265
b. $65,525
c. $49,995
d. $68,320
e. $71,115
Clear my choice
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