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Lewis Interprises is considering relaxing its credit standards to increase its currently sagging sales. As a result of the proposed relaxation, sales are expected to

Lewis Interprises 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 14,000 to 14,700 units during the coming year; The average collection period is expected to increase from 40 to 55 days; embed deaths are expected to increase from 1.5% to 3.5% of sales. The sale price per unit is $36 and the variable cost per unit is $27. The firms required return on equal risk investments is 9.8%. Evaluate the proposed relaxation, and make a recommendation to the firm. (assume a 365 day year)

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