Q32. Simpson Enterprises is considering relaxing its credit standards in order to increase its currently sagging sales. As a result of the proposed relaxation, sales are expected to increase by 20% from 10,000 units to 12,000 units during the coming year; the average collection period is expected to increase from 45 days to 60 days; and bad debts are expected to increase from 1% to 2% of sales. The sale price per unit is $39 and the variable cost per unit is $30. If the firms required return on equal-risk investments is 20%, evaluate the proposed relaxation and make a recommendation to the firm. (Use a 360-day year for your calculations.)