Holdsworth Corporation is considering changing its credit policy to sell to higher-risk customers. Holdsworth forecasts sales of $400,000 to the new customers. Holdsworth also forecasts that while the new customers would be given terms of "net 60," they would pay in 90 days (use a 360-day year) and 14% of sales would become bad debts. Administering these new accounts would cost $9,000 per year. Holdsworth's variable costs are 80% of sales, its tax rate is 30%, and it has a 13% cost of capital.

Should Holdsworth sell to the higher-risk customers?

Yes, because the proposal's NPV is $769.

Yes, because the proposal's NPV is $1,758.

No, because the proposal's NPV is $1,428

No, because the proposal's NPV is $ -1,652.