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pompa pompa
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7 years ago
A firm is considering relaxing credit standards which will result in an increase in annual sales from $3 million to $3.75 million, a decrease in the cost of annual sales from $2,225,000 to $2,000,000, an increase in additional profit contribution from sales of $10,000, and an increase in the average collection period of 15 days, from 20 to 35 days. The bad debt loss is expected to increase from 1 percent to 1.5 percent of sales. The firm's required return on investments is 15 percent. The net result of the firm relaxing its credit standards is ________. (Assume a 360-day year.)
A) $10,000
B) -$16,250
C) -$26,875
D) -$16,875
Textbook 
Principles of Managerial Finance

Principles of Managerial Finance


Edition: 14th
Authors:
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donnabandonnaban
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#1
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7 years ago Edited: 10 months ago, bio_man
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 Crying Face
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Thank you
Anonymous
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#6
10 months ago
Help! The answer is missing an explanation...
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#7
Educator
10 months ago
Quote from: Anonymous (10 months ago)
Help! The answer is missing an explanation...

Solution given, take a look now Slight Smile
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