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 $12,000$ to $12,600$

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 $2\%$ to $3\mathrm{.}5\%$ 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 $24\mathrm{.}9\%.$ 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 $\frac{A}{R}$ 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 drop$-$down menu.$)$