What is the advantage or disadvantage of this decision

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Reference no: EM132848912

Question - Lakeside Corporation provides the following data:

Current annual credit sales $12,000,000

Collection period 2 months

Terms net/30

Rate of return 15%

Lakeside proposes to offer a 3/10, net/30 discount. The corporation anticipates 25 percent of its customers will take advantage of the discount. As a result of the discount policy, the collection period will be reduced to 1.5 months.

Required - What is the advantage (disadvantage) of this decision?

Reference no: EM132848912

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