Jones corporation is considering a sales campaign in which

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Reference no: EM13484447 , Length: 10

Jones Corporation is considering a sales campaign in which it will offer credit terms of 3/15, net/80. The finance manager expects that the collection period will increase from 90 days to 110 days. Information before and during the proposed campaign follows:

	Percentage of Sales before Campaign	Percentage of Sales during Campaign
Cash sales	20	10
Payment from
1-15	35	25
16-120	45	65

The sales campaign is expected to raise sales from $5 million to $6 million. The gross profit rate is 30 percent and the rate of return is 16 percent. Sales discounts are given on cash sales. Should the sales campaign be initiated?

Reference no: EM13484447

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