Considering modifying its credit terms

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Reference no: EM131297352

LETU Inc. is considering modifying its credit terms from net 30 to net 45. They believed that although DIH (50 days) and DPO (60 days) will not change, it will result in a 7% increase in sales. LETU’s annual sales is $600 million and COGS equal 60% of sales. LETU’s annual cost of capital is 10%. How much more is the company worth switching to the new terms? $133.11 M $82.55 M $64.31 M $360.00 M $150.43M

Reference no: EM131297352

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Considering modifying its credit terms : LETU Inc. is considering modifying its credit terms from net 30 to net 45. They believed that although DIH (50 days) and DPO (60 days) will not change, it will result in a 7% increase in sales. LETU’s annual sales is $600 million and COGS equal 60% o..

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