The National Ltd. is examining the question of relaxing its credit policy. It sells at present 20,000 units at a price of the Rs. 100 per unit; the variable cost per unit is Rs. 88 and average cost per unit at the current sales volume is Rs. 92. All the sales are on credit, the average collection period being 36 days.

A relaxed credit policy is expected to increase sales by 10 percent and the average age of receivables to 60 days. Assuming 15 percent return, should the firm relax its credit policy?