Dexter Metal House (DMH) is considering changing its credit terms from '2/15 net 30' to '3/10 net 30' in order to speed collections. At present, 40 percent of DMH's non default customers take the 2…

Dexter Metal House (DMH) is considering changing its credit terms from '2/15 net 30' to '3/10 net 30' in order to speed collections. At present, 40 percent of DMH's non-default customers take the 2 percent discount. Under the new terms, discount customers are expected to rise to 50 percent of non-default customers. Regardless of credit terms, half of the customers who do not take discount are expected to pay on time, whereas the remainder will pay 10 days late. The change does not involve a relaxation of credit standards; therefore, bad debt losses are not expected to rise above their present 2 percent level.