The Nathan Corporation, owner of a 200-room lodging facility catering to corporate bookings only, is considering relaxing its credit standards.

Charlie Nathan believes they could sell an average of five more rooms per day at the current average price of $150.00. The variable cost percentage is 20%.

The hotel’s average daily occupancy is currently 60%.

Charlie believes the average collection period would increase from 25 days to 30 days and the bad debts expense from .5% of sales to 1%. The lodging facility’s opportunity cost is 12%.

Required:

Determine the change in the pre-tax income or loss from implementing the proposed relaxation of its credit standards.