Once again, consider the Bassett Furniture Industries example (Tables 18.1 and 18.2). Assume that rising labor and interest costs have increased Bassett’s variable cost ratio from 0.75 to 0.80 and its required pretax rate of return on receivables and inventory investments from 20 to 25 percent. Reevaluate the effect of Bassett’s pretax profits of extending full credit to the customers in Credit Risk Group 4.