ENTREPRENEURIAL DECISION C1 BTN 9-7 Rakia Reynolds of Skai Blue Media is introduced in the chapter's opening feature. Rakia has a client thatcurrently sells his products through multiple outlets. The client asks Rakia for guidance as he is considering twopossible plans, A or B, for expanding sales for his merchandising company. Plan A. The client would begin selling additional products online directly to customers, which are only currentlysold directly to stores. These new online customers would use their credit cards. It currently has the capability ofselling through its website with no additional investment in hardware or software. Credit sales are expected toincrease by $250,000 per year. Costs associated with this plan are: cost of these sales will be $135,500, credit cardfees will be 4.75% of sales, and additional recordkeeping and shipping costs will be 6% of sales. These online saleswill reduce the sales to stores by $35,000 because some customers will now purchase items online. Sales to storeshave a 25% gross margin percentage. Plan B. The client would expand its market to more stores. It would make additional credit sales of $500,000 tothose stores. Costs associated with those sales are: cost of sales will be $375,000, additional recordkeeping andshipping will be 4% of sales, and uncollectible accounts will be 6.2% of sales.

Required 1. Compute the additional annual net income or loss expected under (a) Plan A and (b) Plan B.2. Should the client pursue either plan? Discuss both the financial and nonfinancial factors relevant to this

decision