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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 from to
units during the coming year; the average collection period is expected to increase from to days; and bad debts
are expected to increase from to of sales. The sale price per unit is $ and the variable cost per unit is
$ The firm's required return on equalrisk investments is Evaluate the proposed relaxation, and make a
recommendation to the firm. Note: Assume a 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 is $Round to the nearest dollar.
The cost from the increase in bad debts is $Round to the nearest dollar.
The net profit or loss from implementing the proposed plan is $Round to the nearest dollar. Enter a negative
number for a loss.
Is the proposed plan recommended?
Select from the dropdown menu.
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