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1. Regency Rose Repair Company is attempting to evaluate whether it should ease collection efforts. The firm repairs 72,000 parts per year at an average
1. Regency Rose Repair Company is attempting to evaluate whether it should ease collection efforts. The firm repairs 72,000 parts per year at an average price of Tk. 32.00 each. Bad debt expenses are 1% of sales, and collection expenditures are Tk.60,000. The average collection period (DSO) is 40 days, and the variable cost per unit is Tk.28.00. By easing collection efforts, Regency expects to save Tk. 40,000 per year in collection expense. Bad debt will increase to 2% of sales, and the average collection period will increase to 58 days. Sales will increase by 1,000 repairs per year. If the firm has a required rate of return on equal-risk investments of 24%, what recommendation would you give the firm? Use your analysis to justify your
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