Until recently, Augean Cleaning Products sold its products on terms of net 6 4 , with an
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Question:
Until recently, Augean Cleaning Products sold its products on terms of net with an average collection period of days. In an attempt to induce customers to pay more promptly, it has changed its terms to EOM, net Assume current sales of $ costs of $ an interest rate of and no defaults. Assume each month has days and a year has days. The initial effect of the changed terms is as follows:
Average Collection Periods Days
Percent of Sales with Cash Discount Cash Discount Net
araise to the power of a
aSome customers deduct the cash discount even though they pay after the specified date.
Calculate the NPV per $ of sales based on the original terms.
Note: Do not round intermediate calculations. Round your answer to decimal places.
Assume that sales volume is unchanged and there are no defaults. Calculate the NPV per $ of sales based on the revised terms.
Note: Assume all sales occur in the middle of the month. Do not round intermediate calculations. Round your answer to decimal places.
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