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(14 pts) 5. The Robinson Corporation is in the volatile garment business. The firm has annual revenues of $300 million and operates with a 40%

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(14 pts) 5. The Robinson Corporation is in the volatile garment business. The firm has annual revenues of $300 million and operates with a 40% gross margin on sales. Bad debt losses average 4% of revenues. Robinson is contemplating an easing of its credit policy in an attempt to increase sales. The loosening would involve accepting a lower-quality customer for credit sales. It is estimated that sales could be increased by $50 million a year. An increase in inventory investment of $3,000,000 will be required. Opportunity costs for inventory is 15%; however, the collections department estimates that bad debt losses on the new business would run five times the normal level, and that internal collection efforts would cost an additional $1.5 million a year. Show computations to explain if the change in policy should be made

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