Discussion Post
• Fred Davis is a finance director of a large industrial products firm that offers a 2% discount for payment within 10days. The average collection period is 28 days and 30% of his customers take the discount. He contends that the discount should be dropped contending that the average collection would only increase to 30 days saving on all accounts taking the discount. However, the marketing manager estimates that sales would drop from 21,000 to 20,000 units.The firm has a 20 % required rate of return and if the selling price is$22per unit with the average cost per unitis$20 at current sales volume and thevariable cost is $17 per unit, should the firm discontinue the discount?
• A firm has a total wage bill of $8million twice a month with a13% cost of capital. Calculate the benefit to the firm of changing to a monthly pay cycle and discuss the potential impact on the employees.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.