Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / Kari Kidd Corporation currently gives credit terms of net 30 days It has $60 million in cr...

Kari Kidd Corporation currently gives credit terms of net 30 days It has $60 million in credit sales and its average collection period is 45 days To stimulate demand the company may give credit

Kari-Kidd Corporation currently gives credit terms of “net 30 days.” It has $60 million in credit sales, and its average collection period is 45 days. To stimulate demand, the company may give credit terms of “net 60 days.” If it does instigate these terms, sales are expected to increase by 15 percent. After the change, the average collection period is expected to be 75 days, with no difference in payment habits between old and new customers. Variable costs are $0.80 for every $1.00 of sales, and the company’s before-tax required rate of return on investment in receivables is 20 percent.
 

May 02 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions