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Finance Assignment | Top Essay Writing

The Dream Corp has annual credit sales of $2 million. Current expenses for the collection department are $40,000, bad-debt losses are 1.0%, and the day’s sales outstanding is 29 days. The firm is considering easing its collection efforts such that collection expenses will be reduced to $30,000 per year.

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The change is expected to increase bad-debt losses to 2.5% and to increase the day’s sales outstanding to 45 days. In addition, sales are expected to increase to $2.1 million per year. Should the firm relax collection efforts if the opportunity cost of funds is 12%, the variable cost ratio is 80%, and taxes are 25%?. Get Finance homework help today

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