1. TV Dream Corp has annual credit sales of $5 million. Current expenses for the collection department are $ 50,000, bad-debt losses are 1.5%, and the days sales outstanding is 38 days. The firm is considering easing its collection efforts such that collection expenses will be reduced to $28,000 per year. The change is expected to increase bad-debt losses to 2.5% and to increase the days' sales outstanding to 55 days in addition, sales are expected to increase to $5.5 million per year. Should the firm relax colle tion efforts if the opportunity cost of funds is 12%, the variable cost ratio is 80%, and taxes are 25%? 1. Relax Collection Efforts Current New Change Credi Sales Current Expenses for collection Bad debt Days Sales Outstanding Sales Variable costs Gross Profit New Collection costs New Bad debt New Days Sales Outstanding New Sales Receivables Carry Cost collection Expenses Bad Debt Loss Profit before tax Taxes Net income Cost of funds Variable cast ratio taxes Should they relax collection effort? (Yes/No)