Emma International is considering easing credit standards to increase sales,and potentially profits.Currently the firm sells 500,000 units at a sales price of $22 per unit and variable cost of $13 per unit.Currently the average collection period is 25 days and the bad debt expense is 2% of sales.The required return on investment is 12%.If credit standards are eased,the sales will increase to 600,000 units; the ACP will increase to 35 days; and the bad debt expense will increase to 3% All else will remain the same.What is the marginal profit from increased sales?
A) $ 900,000.00
B) $11,000,000.00
C) $ 2,200,000.00
D) $ 1,300,000.00
Correct Answer:
Verified
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