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Is the proposed change in policy worth implementing

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Reference no: EM133020969

Question - Mine plc has annual credit sales of GH¢15m and allows its customers 90 days credit. The financial manager is considering the introduction of a three per cent discount for payment within 15 days, and the reduction of the credit period to 60 days. It is estimated that 60 per cent of Mine plc's. customers will take advantage of the discount, while the volume of sales will not be affected. The cost of each item sold by Mine plc. is GH¢12, and the selling price is GH¢14 per unit. The company finances working capital from an overdraft at a cost of 15 per cent. Is the proposed change in policy worth implementing?

Reference no: EM133020969

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