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 12,000 to 13,800 units during the coming year, the average collection period is expected to increase from 30 to 50 days; and bad debts are expected to increase from 2% to 3.5% of sales. The sale price per unit is $37, and the variable cost per unit is $28. The firm's required return on equal-risk investments is 9.2%. Evaluate the proposed relaxation, and make a recommendation to the firm. (Note: Assume a 365-day year.)