A company is considering a more liberal credit policy to increase sales, but expects that 10% of the new accounts will be uncollectible. Collection costs are 4% of new sales and production and selling costs are 76%. Assume income taxes of 30% and an increase in sales of $78,000. No other asset buildup will be required to service the new accounts. Assume the average collection period is 90 days and that there are 360 days per year. The after-tax required return on investment is 18%. a. Should the company extend credit? (3 Marks) b. Given the income determined in part (a), would it be acceptable for the company to extend credit if an increase in inventory is considered? Assume an inventory turnover of 5 times. (2 Marks)