May Corporation's average daily sales is P$6,400,000,10\%$ of which is cash sales. The variable cost ratio is $60\%.$ Starting next year, May Corporation will relax its credit standards. The relaxation in credit standards is expected to cause the following changes:

Total credit sales will increase by $20\%$

The collection period for incremental sales is $60$ days. $($The payment behaviour of the existing customers will not change$).$

The variable cost ratio, even for the incremental sales, will be the same as in the past. The cost of borrowing is estimated at $25\%$ per year. The company uses $360$ days in a year in all its computations.

What is May Corporation's expected benefit $($loss$)$ from the planned relaxation in credit policy? Show the solution

a$.$ P$1,152,000$

b$.$ P$460,800$

c$.(27-520)$

d$.$ P$432,000$