Required to approve the cash discount plan

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Reference no: EM131939815

Klein's Tools is considering offering a cash discount to speed up the collection of accounts receivable. Currently the firm has an average collection period of 61 days, annual sales are 30,000 units, the per-unit price is $43, and the per unit variable cost is $32. A 2% cash discount is being considered. Klein's tools estimates that 75% of its customers will take the 2% discount. If sales are expected to rise to 32,000 units per year and the firm has a 14% required rate of return, what minimum average collection period is required to approve the cash discount plan?

Reference no: EM131939815

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