Currently, ABC Ltd sell only on credit and do not offer cash discounts. Management is...
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Currently, ABC Ltd sell only on credit and do not offer cash discounts. Management is considering offering a 3% discount for payment within 15 days. Currently, the average collection period is 45 days, sales are 40,000 units, selling price is $60 per unit, and variable cost per unit is $30. If the discount is implemented, it is expected that sales will increase to 46,000 units, that 50% of sales will take the discount, and the average collection period will fall to 30 days. The firm's required rate of return is 10%. What is the net benefit/loss from implementing the proposed plan? Note, use a 365-day year.
Select one:
a. $135,148
b. $100,652
c. $173,121
d. $142,052
e. $138,600
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