Parkview Industries currently has an average collection period (ACP) of 35 days. They've introduced an early payment incentive program where historical data shows 70% of customers pay in 20 days and 30% pay in 45 days. What is the change in their ACP? A. 5 days increased B. 7.5 days reduced C. 10 days reduced D. 15 days increased E. No change
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- S Until recently, Augean Cleaning Products sold its products on terms of net 69, with an average collection period of 84 days. In an attempt to induce customers to pay more promptly, it has changed its terms to 2/10, EOM, net 69. Assume current sales of $100, costs of $89, an interest rate of 10%, and no defaults. Assume each month has 30 days and a year has 360 days. The initial effect of the changed terms is as follows: Percent of Sales with Cash Discount 69 Average Collection Periods (Days) Cash Discount Net 39a 89 aSome customers deduct the cash discount even though they pay after the specified date. a. Calculate the NPV per $100 of sales based on the original terms. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. Assume that sales volume is unchanged and there are no defaults. Calculate the NPV per $100 of sales based on the revised terms. Note: Assume all sales occur in the middle of the month. Do round intermediate calculations. Round your…When customers purchase goods on account, Spitz Manufacturing offers them a 2% reduction in the amount owed if they pay within 10 days. This is an example of a: Multiple Choice Sales return. Sales discount. Sales allowance. Bad debt.Harper Corp.'s sales last year were $395,000, and its year-end receivables were $42,500. Harper sells on terms that call for customers to pay 30 days after the purchase, but many delay payment beyond Day 30. On average, how many days late do customers pay? Base your answer on this equation: DSO - Allowed credit period = Average days late, and use a 365-day year when calculating the DSO. O a. 9.74 b. 8.37 Oc8.81 Od. 7.95 Oe. 9.27
- Until recently, Augean Cleaning Products sold its products on terms of net 68, with an average collection period of 83 days. In an attempt to induce customers to pay more promptly, it has changed its terms to 3/10, EOM, net 68. Assume current sales of $100, costs of $88, an interest rate of 11%, and no defaults. Assume each month has 30 days and a year has 360 days. The initial effect of the changed terms is as follows: Average Collection Periods (Days) Percent of Sales with Cash Discount Cash Discount Net 68 38a 88 aSome customers deduct the cash discount even though they pay after the specified date. a. Calculate the NPV per $100 of sales based on the original terms. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Assume that sales volume is unchanged and there are no defaults. Calculate the NPV per $100 of sales based on the revised terms. (Assume all sales occur in the middle of the month. Do not round intermediate…Until recently, Augean Cleaning Products sold its products on terms of net 54, with an average collection period of 69 days. In an attempt to induce customers to pay more promptly, it has changed its terms to 1/10, EOM, net 54. Assume current sales of $100, costs of $74, an interest rate of 13%, and no defaults. Assume each month has 30 days and a year has 360 days. The initial effect of the changed terms is as follows: Average Collection Periods (Days) Cash Discount Percent of Sales with Cash Discount Net 54 24a 74 asome customers deduct the cash discount even though they pay after the specified date. a. Calculate the NPV per $100 of sales based on the original terms. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Net present value b. Assume that sales volume is unchanged and there are no defaults. Calculate the NPV per $100 of sales based on the revised terms. (Assume all sales occur in the middle of the month. Do not round intermediate calculations.…CLV3: A new streaming platform, MV expects to make a margin of $10 every month from each of its active customers. Using the below information, calculate the CLV of each customer for the first three months. Monthly discount rate is 10% • Customer has a transactional relationship with MV • The payment is made at the beginning of the month The number of active customers for MV decreased from 1,250 to 1,000 active customers over the last month. Hint: Calculate the retention rate based on the information above:
- Nottingham Financial purchases computer parts from its suppliers 2/10, net 60. However, Nottingham routinely stretches accounts payable 10 days beyond the due date. What is the effective annual cost of not taking the trade discount? How much does the account stretching reduce the cost of not taking the trade discount?a. Assume that the cost of goods sold is 60% and that the monthly discount rate is 1%. Looking at the values in the exhibit above, you note that the average monthly revenue for a subscribed customer rises as the company sends more emails. In addition, the average monthly revenue for an unsubscribed customer also rises as the company sends more emails. What could explain both of these patterns? b. Calculate the 6-month LTV for each of the four tested email frequencies. Please show the spreadsheet with your calculations and be clear about any assumptions you are making. c. Based on this test, how many emails-per-week should the company be sending to its customers? This email frequency should apply to all customers; the company doesn't want to implement a different email frequency for different kinds of peopleDBA Company is considering changing its credit terms from 2/15, net 30 to 3/10, net 30 in order to speed collections. At present, 40% of Sonata Company‘s customers take the 2% discount. Under the new term, discount customers are expected to rise to 50%. Regardless of the credit terms, half of the customers who do not take the discount are expected to pay on time, whereas the remainder will pay 10 days late. The change does not involve a relaxation of credit standards; therefore bad debt losses are not expected to rise above their present 2% level. However, the more generous cash discount terms are expected to increase sales from P2 million to P2.6 million per year. DBA’s variable cost ratio is 75%, the interest rate on funds invested in accounts receivable is 9 %, and the firm’s income tax rate is 40%. Required: What is the days sales outstanding (DSO) before the change of credit policy? What is the days sales outstanding (DSO) after the change of credit policy? How much is the…
- Cash Crunched Company (CCC) purchases computer parts from its suppliers 2/5, net 60. However, CCC routinely stretches accounts payable 10 days beyond the due date. How much does the account stretching reduce the cost of not taking the trade discount? Select one: a. 2.04% b. 2.34% c. 12.01% d. 14.35% e. None of the above.A supplier hands you an invoice for $47,000 with the terms 4/20, net 180. a. ) What is the effective annual cost (expressed as an APR) if you forgo the discount and pay after 180 days?b. )What is the effective annual cost (expressed as an APR) if you pay after 200 days?Maddox resources has credite given answer accounting questions
