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Lewis Enterprises is considering relaxing its credit standards to increase its currently sagging sales. As a...

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 10?% from 14,000 to 15,400 units during the coming? year; the average collection period is expected to increase from 45 to 55 days; and bad debts are expected to increase from 2.5?% to 44% of sales. The sale price per unit is $38?, and the variable cost per unit is $28.The? firm's required return on? equal-risk investments is 24.5?%.

Evaluate the proposed? relaxation, and make a recommendation to the firm.??

?(?Note:Assume a? 365-day year.)

The additional profit contribution from an increase in sales is

?$

The amount of cost that will be saved due to the reduction in average? A/R is

The net profit from the proposed cash discount is

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