Minimum average collection period

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Klein's Tools is considering offering a cash discount to speed up the collection of accounts receivable. Currently the firm has an average collection period of 67 days, annual sales are 40,000 units, the per-unit price is $41,and the per-unit variable cost is $30. A 2% cash discount is being considered. Klein's Tools estimates that 78% of its customers will take the 2% discount. If sales are expected to rise to 42,000 units per year and the firm has a 14% required rate of return, what minimum average collection period is required to approve the cash discount plan?

The minimum average collection period required to approve the cash discount plan is _________days?

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Reference no: EM131114150

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