Top Posters
Since Sunday
y
2
s
2
a
1
w
1
w
1
i
1
m
1
s
1
c
1
k
1
1
m
1
Home Q & A Board Other Fields Homework Help Business Finance
New Topic  
pharmdwannabe pharmdwannabe
wrote...
Go to Answer
Posts: 139
Rep: 0 0
10 months ago
London Inc. expects to have sales this year of $15 million under its current credit policy. The present terms are net 60; the DSO is 60 days; and the bad debt loss percentage is 5%. Also, London Inc.’s cost of capital is 15%, and its variable costs total 60% of sales. The credit committee proposes to tighten the credit term to net 30. The consultants predict that sales would decrease by $500,000. The new DSO would be 30 days, and the bad debt loss percentage on all sales would fall to 3%. What would be the incremental cost of carrying receivables if this change were made? Assume 360 days in a year.


▸

$157,900



▸

$108,750



▸

–$116,250 (carrying costs would decline)



▸

–$225,000 (carrying costs would decline)

Textbook 
Financial Management: Theory and Practice

Financial Management: Theory and Practice


Edition: 4th
Authors:
Read 57 times
1 Reply
Replies
Answer verified by a subject expert
channy40channy40
wrote...
#1
Posts: 139
Rep: 0 0
10 months ago
Sign in or Sign up in seconds to unlock everything for free
More solutions for this book are available here
1

Related Topics

pharmdwannabe Author
wrote...

10 months ago
Helped a lot
cipcal
wrote...

Yesterday
Thank you, thank you, thank you!
mmmm_dat_userna
wrote...

2 hours ago
Good timing, thanks!
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  1033 People Browsing
 123 Signed Up Today
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Live Chat
Related Images
  
 661
  
 1067
  
 338
Your Opinion
Which industry do you think artificial intelligence (AI) will impact the most?
Votes: 405
Previous poll results: Who will win the 2024 president election?