Q5. Groove Tools is currently selling a product for $13 per unit. Sales (all on credit) for last year were 55,000 units. The variable cost per unit is $8. The firms total fixed costs are $120,000. The firm is currently contemplating a relaxation of credit standards that is expected to result in the following: a 6% increase in unit sales to 58,300 units. an increase in the average collection period from 30 days (the current level) to 45 days. an increase in bad-debt expenses from 1% of sales (the current level) to 2%. The firms required return on equal-risk investments, which is the opportunity cost of tying up funds in accounts receivable, is 13%. Evaluate this proposed change and make a recommendation to the firm. (Assume a 360-day year.)