DDR Corporation has a 12 percent opportunity cost of funds and currently sells on terms of net/10, EOM. The company has sales of 10 million a year, which are 80 percent on credit and spread evenly over the year. The average collection period is currently 60 days. If DDR Company offered terms of "2/10, n/30," customers representing 60 percent of its credit sales would take the discount Should DDR Company change its terms from “net/10, EOM" to “2/10, net 30"? Why?

DDR Corporation has a 12 percent opportunity cost of funds and currently sells on terms of net/10, EOM. The company has sales of 10 million a year, which are 80 percent on credit and spread evenly over the year. The average collection period is currently 60 days. If DDR Company offered terms of "2/10, n/30," customers representing 60 percent of its credit sales would take the discount Should DDR Company change its terms from “net/10, EOM" to “2/10, net 30"? Why?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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