Louis International is considering easing credit standards to increase sales,and potentially profits.Currently the firm sells 200,000 units at a sales price of $125 per unit and variable cost of $103 per unit.Currently the average collection period is 15 days and the bad debt expense is 3% of sales.The required return on investment is 18%.If credit standards are eased,the sales will increase to 250,000 units; the ACP will increase to 35 days; and the bad debt expense will increase to 5% All else will remain the same.What is the marginal profit from increased sales?
A) $6,250,000.00
B) $1,100,000.00
C) $25,000,000.00
D) $5,150,000.00
Correct Answer:
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