Kari-Kidd Corporation currently gives credit terms of "net 45 days." It has $45 million in credit sales, and its average collection period is 50 days. To stimulate demand, the company may give credit terms of "net 70 days." If it does instigate these terms, sales are expected to increase by 25 percent. After the change, the average collection period is expected to be 80 days, with no difference in payment habits between old and new customers. Variable costs are $8 for every $12 of sales, and the company's before-tax required rate of return on investment in receivables is 30 percent.

(A)Should the company extend its credit period? (Assume a 360-day year.)