Relaxation of Credit Standards Assignment
February 18th, 2020
Relaxation of credit standards. Farmers World, a firm specializing in fertilizers. evaluating a proposal to relax the credit standards to increase sales. The impler tation of this plan is expected to increase sales by 10% from 15,500 to 17,050 in the following year. The average collection period will increase from 30 to 45 days, and bad debts are expected to increase from 2% to 5% of sales. The selling price per bag is $15, and the variable cost per bag is $12. The required rate of te on equal-risk investments is 22%. Should the proposed plan be implemented? Explain. (Note: Assume a 365-day year.)Get Finance homework help today