a. Peretti Van Melle India Pvt. Ltd. is the manufacturer of Alpenliebe candies. This year's sales of 'Alpenliebe were BDT 18,000. The firm expects to sell BDT 19,000 worth of Alpenliebe during the upcoming year with sales expected to grow at 4 percent per year. It is considering lengthening its terms of sale. This change in policy would result in a decreased accounts receivable turnover from six times per year (60 days) to four times per year (90 days). Under the proposed terms, next year's sales are expected to increase to BDT 21,000, although the growth rate of sales would be the same as that under the present policy for all years after this. Variable costs of production are 70 percent of gross sales, and the appropriate risk-adjusted discount rate for cash flows is 12 percent. The life of the product is 03 years. The firm's policies are such that inventory turnover is 15 times per year. Under the present policy, bad debts total 2.5 percent of sales; under the proposed policy, this would increase to 5 percent of sales. The firm is in the 38 percent tax bracket. At the end of the product's life, inventory will be liquidated, and accounts receivable will be collected. Should the firm make the proposed change in its terms of sale? b. "One of the main functions of trade credit is that it provides the opportunity for financial arbitrage do you agree with the statement? Explain your