50.1K

Verified Solution

Link Copied!

Question6 0 1 point Agua Inc. may discontinue offering credit to customers who are routinely more than 10 days overdue in repayment. Current annual credit sales are $10,000,000 on terms of "net 30". The change in policy is expected to reduce sales by 10%, cut bad-debt inonn 5% 1 39, and educe AC from 72 days to 45 days. Agua's gross profit ratio is 30% and its required return on ARIS 25% What is the net expected effect from tightening the credit policy? A net benefit of $145,753 A net beneft of $150,398 A net cost of ($1,380) A net benefit of $42,500 Question 7 0 1 point Belsole Industries sells its products on credit terms of "2/10 net 40 Belsole is considering granting credit to retailers with total assets as low as $500,000, which is below their current minimum asset requirement of $750,000. Belsole believes sales will increase by $7,000,000 from the new credit group, but the ACP is estimated to be 60 days for this new group, as opposed to 35 days for current customers- lf 20% of the new customers will take the discount and 4% of the new revenues will be written off as bad debt should Besole lower its credit standards Asume a vanable rs ratio of 70% and a 15% required return on AR. Yes, the net expected benefit is $1,458,392 Yes, the net expected benefit is $2,300,324 Yes, the net expected benefit is $1,619,397 No, the net expected benefit is ($38,246)

Answer & Explanation Solved by verified expert

See Answer