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Shortening the credit period A firm is contemplating shortening its credit period from 40 to...

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Shortening the credit period A firm is contemplating shortening its credit period from 40 to 30 days and believes that, as a result of this change, its average collection period will decine from 44 to 37 days Bad-debt expenses are expected to decrease from 1 4% to 1 1% of sales The firm is currenty selling 12,000 units but believes that as a result of the proposed change, sales will decline to 10,000 units. The sale price per unit is $56, and the variable cost per unit is $46. The 6rm has a required return on equal nsk investments of 25 1% Evaluate this decision, and make a recommendation to the firm (Note: Assume a 365 day year The reduction in proftit contribution from a decline in sales is (Round to the nearest dollar. Enter as a negative number.) The benefit from the reduced marginal investment in A/R is S(Round to the nearest dollar.) The cost savings from the reduction in bad debts is s(Round to the nearest dollar.) The net profit or loss from implementing the proposed plan is SLI (Round to the nearest dollar Enter a negative number for a loss ) Is the proposed plan recommended? | I (select from the drop-down menu )

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