$3.$ Sema Wewe Investments Ltd $($SWIL$)$ has current sales of Tshs $1\mathrm{.}5$ billion per year with a profit margin of $25\%$ and bad debts are usually one percent of sales. Cost of sales comprises $80$ percent variable costs and $20$ percent fixed costs, while the company$$s required rate of return is $12$ percent. SWIL currently allows customers $30$ days credit, but is considering increasing this to $60$ days in order to increase sales.

It has been estimated that this change in policy will increase sales by $15$ percent, while bad debts will increase from one percent to four percent. It is not expected that the policy change will result in a increase in fixed costs and creditors and stock will be unchanged.

Required:

Assume that you are the Managing Partner of Daima Financial Consultants $($DFC$)$ which has been engaged by SWIL to advise on several finance, marketing and administrative issues and you are currently working on the proposed policy change. Should you recommend that SWIL introduce the proposed policy or not? $($In either case provide a logical financial reasoning supported by relevant computations$)$