Tyres Ltd sells tyres on credit only. Company management estimated that it could increase sales by relaxing its credit terms. Currently the average collection period is 11 days. It Is expected that this will change to 40 days under the new terms. Sales are expected to increase from R90 million to R105 million. No discounts are offered, and bad debts are negligible. The company can borrow short-term funds at a rate of 10% and has a gross profit margin of 15%. Would it be worthwhile for the company to change its credit terms?

Motivate your answer briefly.