WhyNot Ltd is considering relaxing its credit standards, which will result in annual sales increasing from $1.50 million to $1.79 million. Costs of goods sold represent 35% of sales and the average collection period is expected to increase from 35 to 53 days. The firm requires a return of 10.0%.

1.What is the expected additional profit contribution from sales as a result of the relaxation of credit standards? A. $290,000 B. $101,500 C. $90,971 D. $525,000 E. $188,500 32.

2. What is the effect of the proposal to relax credit standards on the turnover of accounts receivable? A. It will decrease to 6.88679. B. It will increase to 10.42857. C. It will increase to 6.88679. D. It will decrease to 10.42857. E. Turnover of accounts receivable will remain unchanged.

3. What is the effect of the proposal to relax credit standards on the average investment in accounts receivable? A. It will decrease to $40,629. B. It will increase to $40,629. C. It will decrease to $50,342. D. It will increase to $90,971. E. The average investment in accounts receivable will remain unchanged.

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