Lewis Enterprises is considering relaxing its credit standards

Relaxation of credit standards Lewis Enterprises is considering relaxing its credit standards to increase its currently sagging sales. As a result of the proposed relaxation, sales are expected to increase by 5% from 12,000 to 12, 600 units during the coming year; the average collection period is expected to increase from 40 to 55 days; and bad debts are expected to increase from 1.5% to 3.5% of sales. The sale price per unit is $42, and the variable cost per unit is $33. The firm's required return on equal-risk investments is 25.5%. Evaluate the proposed relaxation, and make a recommendation to the firm. The additional profit contribution from an increase in sales is $. The cost from the increased marginal investment in A/R is $. The cost from the increase in bad debts is $. The net profit or loss from implementing the proposed plan is $. Is the proposed plan recommended