Forward Limited is manufacturer of plastic related products. It manufactures items such as water pipes, wire insulation products and plastic films. Its products are sold to industrial customers to the domestic market primarily at Outapi in the north of the country and at Arindis at the Coast. The summarised statement of profit and loss and other comprehensive income and statement of financial position of Forward Limited for the year ended 31 December 2022. Statement of financial position Cash sales amount to 30% of total sales. The cost of sales figure of N$149980 is based on actual sales. The total production costs for 2022, after allowing for changes in inventory levels of raw materials and work in in progress amounted to N$155981. Trade creditors comprises of raw material purchases. Outapi branch propose the following in order to increase its revenue: Current policy Annual sales for the current year amounted to N\$ 11 million of which 20% was cash sales. Current credit policy offers no early settlement discount to customers and on average customers settle their accounts within 40 days. Currently there are no bad debts. Outapi contribution ratio is 30%. Outapi branch management believes that if credit policy is changed, there will be an increase of 30% in credit sales to new customers, but contribution margin will remain the same. Proposed change in credit policy a) Grant 2% on cash sales and credit sales if account is paid in 15 days. b) No discount if account is paid after 15 days. c) It is estimated that 70% of current customers will take the discount and the remainder will pay in 60 days. d) There will be no change in annual sales to cash customers. e) Sixty percent of new customers will take the discount and balance will pay in 60 days. f) Bad debts amounting to N$180000 are expected from the increased sales. g) Inventory will increase by N$600000 while creditors will increase will increase by N$200000 to sustain increased sales. The tax rate is 28% and WACC is 20% Arindis Branch purchases and selling information The supplier is prepared to offer a 2% discount on bulk orders of 2000 units or greater. Currently, the branch orders 1500 units