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Should the company extend the credit period or not

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Question 1: The ABC Company's existing sales are P1,800,000. It is currently extending a credit period of n/30 its customers. The company is contemplating to increase it sales by P160,000 by lengthening the existing credit period to n/45. The bad debt losses on additional sales are expected to be 5 percent. The variable cost ratio is 80% and the required rate of return is 15%. Should the company extend the credit period or not?

Reference no: EM132593886

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