AU Liberty U x Bb Course Content 201540 X k 3 x MMail Hoy, John Outloo x C ezto.

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AU Liberty U x Bb Course Content 201540 X k 3 x MMail Hoy, John Outloo x C ezto.mheducation.com /hm.tpx Homework 3 Question 24 (of 24) 24. 1.00 points Dome Metals has credit sales of$486,000 yearly with credit terms of net 90 days, which is also the average Collection period. Assume the firm adopts new credit terms of 4/15, net 90 and all customers pay on the last of the discount period. Any reduction in accounts receivable will be to reduce the firm's bank loan which costs 12 percent. The new credit terms will increase sales by 20 percent because the discount will make the firm's price competitive. a. If Dome earns 20 percent on sales before discounts, what will be the net change in income if the new credit terms are adopted? (Use a 360-day year.) Net change in income b. Should the firm offer the discount? No Yes References eBook & Resources Hints Hint #1 Check my work instructions l help Save & Exit Submit 2:02 PM /12/2015

Explanation / Answer

b. Yes. Firm should offer the discount.

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