Mojave Inc. has credit terms of 3/15, net 45. Based on experience, 67% of all customers will take the discount. Given this information, calculate average collection period.

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Quizplus · Accepted Answer

The average collection period can be calculated by taking into account the percentage of customers who take the discount and those who don't. For those who take the discount, the period is 15 days, and for those who don't, it's 45 days. Thus, the calculation is: (67% * 15 days) + (33% * 45 days) = 10.05 days + 14.85 days = 24.90 days.