Discount Policy. Stevens Company presents the following information:
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Current annual credit sales:
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$24,000,000
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Collection period:
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3 months
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Terms:
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net/30
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Rate of return:
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18%
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The company is considering offering a 4/10, net/30 discount. It anticipates that 30 percent of its customers will take advantage of the discount. The collection period is expected to decrease to 2 months. Should the discount policy be implemented?