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Should the credit terms of the company be changed

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Question - A company has a 15 per cent required rate of return. It is currently selling on terms of net 10. The credit sales of the company are $120 million a year. The company's collection period currently is 60 days. If the company offered terms of "2/10, net 30", 60 per cent of its customers will take the discount and the collection period will be reduced to 40 days. Should the credit terms of the company be changed?

Reference no: EM132919465

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