Find what is the additional opportunity cost to the company

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Accounts Receivable Management:

Problem 1: Galactus Inc. is considering bringing its credit policy in line with industry standards. The company's current policy is net 60 days and its average collection period is also 60 days. Its proposed new policy is 2/10 net 45 days. Galecki has an available line of credit with its bank at an interest rate of 0.6% per month. If the company made sales on credit totalling $650,000 per month under each scenario, what is the additional opportunity cost to the company of the proposed credit policy on these sales? (Assume one month as 30 days, and all customers will take advantage of the discount.) Explain your answer.

a) $6,500

b) $10,400

c) $14,300

d) $5,200

Reference no: EM132907552

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