Dome Metals has credit sales of $180,000 yearly with credit terms of net 60 days, which...

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Finance

Dome Metals has credit sales of $180,000 yearly with creditterms of net 60 days, which is also the average collectionperiod.

a. Assume the firm offers a 3 percent discount forpayment in 18 days and every customer takes advantage of thediscount. Also assume the firm uses the cash generated from itsreduced receivables to reduce its bank loans which cost 12 percent.What will the net gain or loss be to the firm if this discount isoffered? (Use a 360-day year.
Net change in Income

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Dome Metals has credit sales of $180,000 yearly with creditterms of net 60 days, which is also the average collectionperiod. a. Assume the firm offers a 3 percent discount forpayment in 18 days and every customer takes advantage of thediscount. Also assume the firm uses the cash generated from itsreduced receivables to reduce its bank loans which cost 12 percent.What will the net gain or loss be to the firm if this discount isoffered? (Use a 360-day year.Net change in Income