A firm is considering relaxing its credit standards which will result in annual sales increasing from $1.50
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Question:
A firm is considering relaxing its credit standards which will result in annual sales increasing from $1.50 million to $2 million. Cost of goods sold represent 39 percent of sales and the average collection period is expected to increase from 37 to 48 days. If the firm requires a return of 13.3 percent, what is the cost of investing in the extra accounts receivables from the planned relaxation of credit standards? Please round your answer to the nearest dollar but exclude the $ or , when typing your answer. (i.e. $11,209.44 should be typed as 11209)
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