The Problem: The Ube Company expects to have sales of Php 10 million this year under its current operating policies. Its variable costs as a percentage of sales are 80 percent, and its cost of capital is 16 percent. Currentlly, UBE's credit policy is net 25 (no discount for early payment). However, its day sales outstanding (D50) is 30 days, and its bad debt loss percentage is 2 percent. UBE spends Php 50,000 per year to collect bad debts and its taxes rate is 40 percent. The Credit Manager is considering two proposals for changing UBE's credit policy: Proposal 1: Lengthen the credit period by going from net 25 to net 30. Collection, expenditures will remain constant Under this proposal, sales are expected to increase by Php 1.000,000 and the bad debt loss percentage on new sales is expected to rise to 4 percent (the loss percentage on old assets should not change). In addition, the DSO is expected to increase from 30 to 45 days on all sales. Proposal 2: Shorten the credit period by going from net 25 to net 20. Again, collection expenses will remain constant. The anticipated effects of this change are a decrease in sales of Php 1,000,000 per year, a decline in the DSO from 30 to 22 days and a decline in the bad debt loss percentage to 1 percent on all sales. Required: Find the expected change in net income, taking into consideration anticipated changes in carrying costs for accounts receivable, the probable bad debt loses and the discounts likely to be taken, for each proposal. Should a change in credit policy be made