Reference no: EM132957916

Question - Jaya sdn bhd has annual credit sales of RM 2100000 and allows 90 days credit. Jaya is considering introducing 2% cash discount for payment within 20 days and reducing the credit period to 60 days. 55% of its customers are expected to take advantage of the discount. Jaya estimates that's its sales will increase by 10% and it is expected that jaya will generate RM 15000 of additional profit from the increased sales. The opportunity cost of funds invested in accounts receivable is 10% per annum. Assume 360 days in a year. Explain whether jaya should approved the proposed policy.