$15-16$ Nantucket Nuts is evaluating whether to loosen its

credit terms. With the current terms, annual sales

are $$540,000$ and the average collection period

$($DSO$)$ is $38$ days. With the new credit terms, sales

are expected to increase to $$549,000$ and the DSO

would increase to $50$ days. Nantucket's variable

cost ratio is $80$ percent and its average cost of

funds is $13$ percent. Should the change in credit

terms be made? Assume all operating costs are

paid at the time inventory is sold and all sales are

collected at the DSO. $($LO $15-4)$