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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
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 from comma to comma units during the coming year; the average collection period is expected to increase from to days; and bad debts are expected to increase from to of sales. The sale price per unit is $ and the variable cost per unit is $ The firm's required return on equalrisk investments is Evaluate the proposed relaxation, and make a recommendation to the firm.Note: Assume aday year.
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