x Company produces and commercializes phones. Given the COVID-19 pandemic spread, the financial manager suggests extending the credit terms from net 40 to net 60 to stimulate sales. X also benefits from relaxing of terms from its suppliers from net 30 to net 35. The manager is wondering how to estimate the financial impact of these new policies would have on the shareholder's wealth. Following the extension of DSO, the daily sales increase at a growth rate equals 5%. The manager presents you the following information:

Annual cost of capital = 15%

Purchase amount = 60% of COGS amount

COGS amount = 50% of sales amount

Annual sales amount = $93,075,000

Inventory turnover =9.125

1- Calculate the daily NPV of the current terms.

2- Calculate the daily NPV of the proposed terms.

3- What is you recommendation? Explain.