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4.A firm is considering relaxing credit standards, which will result in annual sales increasing from $1.5 million to $1.75 million, the cost of annual sales
4.A firm is considering relaxing credit standards, which will result in annual sales increasing from $1.5 million to $1.75 million, the cost of annual sales increasing from $1,000,000 to $1,125,000, and the average collection period increasing from 40 to 55 days.The bad debt loss is expected to increase from 1 percent of sales to 1.5 percent of sales.The firm's required return on investments is 20 percent.The firm's cost of marginal investment in accounts receivable is (assume a 360 day year)
A.$5,556.C.$12,153.
B.$9,943.D.$152,778.
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