The planned relaxation of credit standards

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A firm is considering relaxing its credit standards which will result in annual sales increasing from $1.50 million to $1.94 million. Costs of goods sold represent 47 percent of sales and the average collection period is expected to increase from 38 to 48 days. If the firm requires a return of 9.0 percent, what the cost of investing in the extra accounts receivables from the planned relaxation of credit standards?

Reference no: EM131333389

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