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 $5\%$ from $10,000$ to

$10,500$ 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 $3\%$ to $5\%$ 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 $10\mathrm{.}6\%.$ 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 $$.($Round to the nearest dollar.$)$

The cost from the increased marginal investment in A$/$R is $$.$ The cost from the increase in bad debts is $$.$ The net profit or loss from implementing the proposed plan is $$.$ Is the proposed plan recommended?