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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,
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 13,000 to 14,950 units during the coming year, the average collection period is expected to increase from 35 to 50 days, and bad debts are expected to increase from 1.5% to 3.5% of sales. The sale price per unit is $41, and the variable cost per unit is $31. The firm's required return on equal-risk investments is 97% Evaluate the proposed relaxation, and make a recommendation to the firm (Note: Assume a 365-day year) The additional profit contribution from an increase in sales is $(Round to the nearest dollar) Enter your answer in the agswer box and then click Check Answer 4 parts Clear All Check Answer remaining
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