t lew 33. (LO 24.2) ABC Inc. currently grants no credit, but it is considering offering new credit terms of net 30. As a result, the price of its product will increase by $2 per unit. The original price per unit is $50. Expected sales will increase by 1,000 units per year. The original sales are 10,000 units. Variable costs will remain at $25 per unit and bad debt losses will amount to $3,000 per year. The firm will finance the additional investment in receivables by using a line of credit, which charges 5-percent interest. The firm's tax rate is 20 percent. Should the firm begin extending credit under the terms described? (Assume ABC benefits from the credit policy change indefinitely.) 33. (LO 24.2) ABC Inc. currently grants no credit, but it is considering offering new credit terms of net 30. As a result, the price of its product will increase by $2 per unit. The original price per unit is $50. Expected sales will increase by 1,000 units per year. The original sales are 10,000 units. Variable costs will remain at $25 per unit and bad debt losses will amount to $3,000 per year. The firm will finance the additional investment in receivables by using a line of credit, which charges 5-percent interest. The firm's tax rate is 20 percent. Should the firm begin extending credit under the terms described? (Assume ABC benefits from the credit policy change indefinitely.)