Proposed? relaxation and make recommendation to the firm

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Reference no: EM131539422

Lewis Enterprises is considering relaxing its credit standards to increase its currently sagging sales. As a result of the proposed? relaxation, sales are expected to increase by 5 5?% from 10 comma 000 10,000 to 10 comma 500 10,500 units during the coming? year; the average collection period is expected to increase from 30 30 to 45 45 ?days; and bad debts are expected to increase from 1 1?% to 3 3?% of sales. The sale price per unit is $ 37 $37?, and the variable cost per unit is $ 26 $26. The? firm's required return on? equal-risk investments is 24.2 24.2?%. Evaluate the proposed? relaxation, and make a recommendation to the firm. ?(?Note: Assume a? 365-day year.)

Reference no: EM131539422

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