Winslow, Inc., a battery manufacturer, is contemplating lengthening its credit period from net 30 days to net 60 days. Presently, its average collection period is 40 days, and the firms CFO believes that with the proposed new credit period, the average collection period will be 75 days. The firms sales are $800 million, and the CFO believes that with the new credit terms, sales will increase to $900 million. At the current $800 million sales level, the firms variable costs are $560 million. The firms CFO estimates that with the proposed new credit terms, total bad debt expenses will increase from the current level of 1.5 percent of sales to 3.0 percent of sales. The CFO also estimates that due to the increased sales volume and accompanying receivables, the firm will have to add additional facilities and personnel to its credit and collections department. The annual cost of the expanded credit operations resulting from the proposed new credit period is estimated to be $12 million. The firms required return on similar risk investments is 15 percent. Assume a 365-day year. Evaluate the economics of Winslows proposed credit-period lengthening, and make a recommendation to the firms management, as to whether or not the new credit policy should be implemented.