4. Problem 22-05 Problem 22-5 Relaxing Collection Efforts The Boyd Corporation has annual credit sales of $1.6 million. Current expenses for the collection department are $40,000, bad-debt losses are 1.5%, and the days sales outstanding is 30 days. The firm is considering easing its collection efforts such that collection expenses will be reduced to $21,000 per year. The change is expected to increase bad-debt losses to 2.5% and to increase the days sales outstanding to 45 days. In addition, sales are expected to increase to $1,625,000 per year. Assume a 365-day year. Should the firm relax collection efforts if the opportunity cost of funds is 19%, the variable cost ratio is 65%, and taxes are 35%? What is the effect of credit policy change? Do not round intermediate steps. Round your answer to the nearest dollar. Net income changed by $ The firm : relax its collection efforts. Attempts: 4. Problem 22-05 Problem 22-5 Relaxing Collection Efforts The Boyd Corporation has annual credit sales of $1.6 million. Current expenses for the collection department are $40,000, bad-debt losses are 1.5%, and the days sales outstanding is 30 days. The firm is considering easing its collection efforts such that collection expenses will be reduced to $21,000 per year. The change is expected to increase bad-debt losses to 2.5% and to increase the days sales outstanding to 45 days. In addition, sales are expected to increase to $1,625,000 per year. Assume a 365-day year. Should the firm relax collection efforts if the opportunity cost of funds is 19%, the variable cost ratio is 65%, and taxes are 35%? What is the effect of credit policy change? Do not round intermediate steps. Round your answer to the nearest dollar. Net income changed by $ The firm : relax its collection efforts. Attempts