Business, 07.10.2019 17:10 trent1002brown

Blueroot inc. is considering a change in its financing policy. currently, it uses maximum trade credit by not taking discounts on its purchases. the standard industry credit terms offered by all its suppliers are 2/10 net 30 days, and the firm pays on time. the new cfo is considering borrowing from its bank, using short-term notes payable, and then taking discounts. the firm wants to determine the effect of this policy change on its net income. its net purchases are $11,760 per day, using a 365-day year. the interest rate on the notes payable is 10%, and the tax rate is 40%. if the firm implements the plan, what is the expected change in net income?

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