PART A The Senior Finance Director at Brother-Governor Company is considering a change in credit policy and has gathered the following data. Brother-Governor currently has total sales of $9 million (out of which, $1 million is cash sales). Cost of sales is 75% and the current level of bad debts is 2% and the firm's effective working capital interest rate is 8%. The company is considering a change in credit terms from its current policy (2/10, n/30) to a new policy (2/15, n/45). The new policy is expected to generate an additional $1.5 million in credit sales. Under the new credit policy, it is expected that half of the company's customers will take the discount and pay during the discount period. Approximately 40% of customers currently pay within the discount period. The gross margin is expected to remain the same if the new credit policy is implemented. However, bad debts on the new sales will likely increase to 3% of credit sales. The current inventory turnover of 6 is expected to increase to 7 if the new credit policy is implemented. Required: a. What would you advise the Senior Finance Director to do relative to the change in credit policy? (Show all relevant calculations). (14 marks)