Question: Please provide step by step solution. C) Krug Gold Coin, Inc. is considering shortening its credit period from 30 days to 20 days and believes
Please provide step by step solution.

C) Krug Gold Coin, Inc. is considering shortening its credit period from 30 days to 20 days and believes as a result of this change, its average collection period will decrease from 36 days to 30 days. Bad debt expenses are also expected to decrease from 1.2% to 0.8% of sales. The firm is currently selling 300,000 units but believes as a result of the change, sales will decline to 275,000 units. On 300,000 units, sales revenue is $4,200,000, variable costs total $3,300,000 and fixed costs are $300,000. The firm has a required return on similar risk investments of 15%. Evaluate this proposed change and make a recommendation to Krug Gold Coin
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