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  • 1.  Do anyone know the procedure for doing this problem? It’s from Section B part2

    Posted 05-07-2023 06:11 AM

    A corporation has been advised by its accountant that the following four sales volumes could be achieved along with the following receivable payment patterns and credit losses, depending on the company's credit policy (in thousands). 
    Sales Volume
    30 Days
    60 Days
    90 Days
    120 Days
    Credit Losses
    I.
    $520
    $300
    $100
    $100
    $    0
    $  20
    II.
    630
    200
    200
    100
    100
    30
    III.
    770
    200
    100
    200
    200
    70
    IV.
    900
    100
    200
    200
    300
    100
    Assuming that the firm's cost of capital is 20% and that all payments are made on the first possible day of the aging month, which sales volume will maximize profit?


  • 2.  RE: Do anyone know the procedure for doing this problem? It's from Section B part2

    Posted 05-11-2023 09:43 AM

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    ------------------------------
    Arshath Tamimil Ansary Mariam Beevi
    Student
    Nagercoil TN
    India
    ------------------------------

    Original Message


  • 3.  RE: Do anyone know the procedure for doing this problem? It's from Section B part2

    Posted 05-12-2023 01:21 AM

    Hi,
    I. Sales volume $500 will maximize profit with given inputs of cost and credit losses.

    Slno: Sales Volume( $ in Thousands)
    30 Days
    		 Interest cost ( base 360 days)
    60 Days
    		 Interest cost ( base 360 days)
    90 Days
    		 Interest cost ( base 360 days)
    120 Days
    		 Interest cost ( base 360 days)
    Credit Losses
    20%
    		  Net collections inflow % collections to Sales Volume
      A                   Total cost - B C  = A -B D=C/A
    I.
    520
    300
    		        5.00
    100
    		            3.33
    100
    		 5
    0
    		                -  
    20
    		               33.33      466.67 89.7%
    II.
    630
    200
    		        3.33
    200
    		            6.67
    100
    		 5
    100
    		            6.67
    30
    		               51.67      548.33 87.0%
    III.
    770
    200
    		        3.33
    100
    		            3.33
    200
    		 10
    200
    		           13.33
    70
    		             100.00      600.00 77.9%
    IV.
    900
    100
    		        1.67
    200
    		            6.67
    200
    		 10
    300
    		           20.00
    100
    		             138.33      661.67 73.5%


    ------------------------------
    Kishore Kumar Natakala
    Other
    BENGALURU
    India
    ------------------------------

    Original Message