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A firm is considering relaxing its credit standards which will result in annual sales increasing from $1.50 million to $1.91 million. Cost of goods sold

A firm is considering relaxing its credit standards which will result in annual sales increasing from $1.50 million to $1.91 million. Cost of goods sold represent 82 percent of sales and the average collection period is expected to increase from 32 to 61 days. If the firm requires a return of 12.6 percent, what is the cost of investing in the extra accounts receivables from the planned relaxation of credit standards?

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