A company currently sells 72,000 units at Rs 32 each. Other data:

Current bad debt expense = 3 percent Collection expenditure = Rs 20,000 ACP = 58 days Variable cost = Rs 25 The company is contemplating on spending an additional Rs 40,000 on collections to reduce bad debt expenses to 1 percent and ACP to 40 days. As a result of stricter collection policy, sales are expected to decrease to 71,000 units. If the cost of capital is 19 percent, would you recommend the new policy?