3. Evaluation of a proposed change in the firm's collection policy Eden Exports, an importer and exporter of precous metals and jewilry from around the world, sellu its ebjets dfart to stores in she southwestern states aed generates anneal sales of \$7,500,000, In response to increasing concerns tegaroing the firm's slow coliections and devated bad-debt ratios, Eden's treasurer has suggested that the firm chanipe ats current collection policy. 5 pocifically, he proposes that the firm progresi bevond ies cotrent collection eftorts - sending late-parment notices and making follow-up telephone calls-and hire an outside brefessigeal collectian apency. It ia expected that the collection agency will cort $45,000 and that the firm's sales and inventory requirements wil be unaflected br the policy change. To faclitake the evaluation of this proposal, the treasurer has had his assistant, Kaitlin, cellect the following information and has asked you to determine whether or not Eden should revise its cellection pelicy: Given this data and aisuming that the revised collection policy is implemented, complete Ine followng statemente. (Note: found rour answers to the nuarest dolect? Edens accounts miztrable investment is expected to change try 0. The marginal income earried on anz freed funds is expectod to be C. The diange in the firmis byd debe lossen is forecast to be 0. The expected net benefit associated eath the revisted poficy is llased on these findings, thoul fderi make the ceoposed change? why of wiry not? Ao, because the net benefit of the proposal is equal to or oremer than t0. Ns, becaves the net benefit of the preportal is negative. Yes, becmit the net benefit of the propotal is negation Yes, because the net benent of the proposal is equal to of greater than to. Sithing a tax colection podcy will result in added costs and chen wil not increate the speed at which the colections are rackiyed nor reduce the firm v fosses due ta uncillectible accounts. Cont is not a relevaue factor when selting of modifing a firmis collection policy. briet carh fow dthiculies. 3. Evaluation of a proposed change in the firm's collection policy Eden Exports, an importer and exporter of precious metals and jewelry from around the world, sells its objets d'art to stores in six southwestern states and generates annual sales of $7,500,000. In response to increasing concerns regarding the firm's slow collections and elevated bad-debt ratios, Eden's treasurer has suggested that the firm change its current collection policy. Specifically, he proposes that the firm progress beyond its current collection efforts-sending late-payment notices and making follow-up telephone calls-and hire an outside professional collection agency. It is expected that the collection agency will cost $45,000 and that the firm's sales and inventory requirements will be unaffected by the policy change. To facilitate the evaluation of this proposal, the treasurer has had his assistant, Kaitlin, collect the following information and has asked you to determine whether or not Eden should revise its collection policy: Coven this data and assuming that the revised collection policy is impiemented, complete the following statements. (Note: Round your ansivers to the nourest dollar.) Eden's accounts receivable investment is expected to change by B. The marginal income earned on any freed funds is expected to be C. The change in the firm's bad-debt losses is forecast to be D. The expected net benefit associated with the revised policy it Based on there findings, should Eden make the proposed change? Why or why not? No, because the net benefit of the proposal is equal to or greater than $0. No, because the net benefit of the proposal is negative. Yes, because the net benefit of the proposal is negative. Yes, bechuse the net benefit of the proposal is equal to or greater than $0. Selting a fimm's collection policy involves trade-offs. Which of the following statements rogarding this process are true? check all thur appir. fietting a lax collection policy will result in added costs and often will net increase the speed at which the collections are recelved nor modace the firmis losces due to uncollectible accounts. A goed cilection policy is an expensive policy that results in an average cellection poriod equal to the credit period and zero bad debts. Coot is not a relevent factur when setting or modifulig a firm is collection pollicy. bele cach flom difficamien