Fatima Fashions has annual credit sales of 250,000 units with an average collection period of 70 days. The company has a per unit variable cost of US$20 and a per unit sale price of US$30. Bad debts currently are 5 percent of sales. The firm estimates that a proposed relaxation of credit standards would not affect its 70­day average collection period, but would increase bad debts to 7.5 percent of sales, which would increase to 300,000 units per year. Fatima requires a 12 percent re­ turn on investments. Show all necessary calculations required to evaluate Fatima's proposed relaxation of credit standards.