Relaxation of credit standards Lewis Enterprises is considering relaxing its credit standards to increase its currently sagging sales. As a result of the proposed relaxation, sales are expected to increase by 15% from 10,000 to 11,500 units during the coming year; the average collection period is expected to increase from 50 to 65 days; and bad debts are expected to increase from 1% to 3% of sales. The sale price per unit is $45, and the variable cost per unit is $35. The firm's required return on equal-risk investments is 24.2%. Evaluate the proposed relaxation, and make a recommendation to the firm. { Assume a 365-day year.)