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Does the company need to switch to credit sales

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Reference no: EM132522090

A company's cash sales have an average value of $ 120,000. The company plans to sell on credit to increase its profits. Sales with the terms 4/25 n / 60 are assumed to have a value of $ 320,000, with a profit margin of around 16%. With this discount offer, it is estimated that 45% of customers will use it, while the rest pay on the 60th day.

Question:

Question a. Does the company need to switch to credit sales if the cost of funds is 30%?

Question b. Does the company sell at a discount or without a discount?

Reference no: EM132522090

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