A company is considering increasing its credit period to customers from one month to two months. Annual revenue is currently $1,200,000. It is expected that the increased credit period would increase sales by 25% and result in an increase in profit of $45,000, before any INCREASE in finance charges have been taken into account. The companys cost of capital is 10%.

What is the financial effect of this proposal, after taking into account any increase in finances charges?

a) Increase in profit of $35,000

b) Decrease in profit of $35,000

c) Increase in profit of $30,000

d) Decrease in profit of $30,000