Question: Mojo Ltd is trying to increase sales and is looking if it should extend credit to all of their customers. Currently Mojo is a cash business with sales of $100,000 a month and expenses of $63,000 a month. Mojo believes if it moves to 14 days credit they will double sales to $200,000 a month but the cost will still have to be paid in cash and increase to a total of $110,000 a month. Mojo believes if it extends credit some customers will pay late and some may never pay. Mojo has assumed, existing cash customers will take advantage of the credit offering. The repayment assumptions are 70% will pay within the 14 days and 30% in 28 days. If Mojo has a required rate of return of 1% per month should they extend credit?