The marketing manager of Arjun Enterprises would like to extend the credit period for all the customers, feeling it can only be beneficial. Discuss with the Marketing manager how extension of credit period can affect Arjun Enterprises Also discuss two methodsby which the company can control its accounts receivables. (10 marks) Arjun Ltd. Currently provides 30 days credit to its customers. Its present sales are Rs.75 lacs and the ratio of Variable costs to Sales is 70%. The firm has a cost of capital of 14% and is in the 35% tax bracket. The Sales director feels that Sales can be increased by changes in the Credit policy of the company and is considering two options-A and B as follows: (A) Extend credit period to 45 days. Such an extension is likely to increase sales by Rs. 20 lacs with the bad debt proportion on additional sales at 8%. (B) Offer discount for timely payment with terms of 2/10, net 30. Due to this, sales are expected to increase by 20%. It is expected that 50% of total sales will be utilizing the cash discount. As a financial analyst, evaluate the options based on the criteria of Residual income, and suggest the best course of action with reasoning. (20 marks)