Question 3 (6 Marks) Tyres Ltd sells tyres on credit only. The management of the company estimated that it could increase sales by offering better credit terms. Currently, the days sales outstanding (or average collection period) is 11 days. It is expected that this will change to 40 days under the new standards. Sales are expected to increase from R100m to R105m. No discounts are offered and bad debts are negligible (zero). The company can borrow short term funds at a rate of 10% and has a gross profit margin of 15%. Would it be worthwhile for the company to change its credit terms? Required: Write down only the change in gross profit, the change in bad debt, the change in the investment in accounts receivable and the expected change in net profit