Accounts receivable changes Tara's Textiles currently has credit sales of $20 million per month, an average...

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Accounts receivable changes Tara's Textiles currently has credit sales of $20 million per month, an average collection period of 62 days, and bad debts equal to 4.5% of sales. Assume that the price of Tara's products is $60 per unit and that the variable costs are $53 per unit. The firm is considering tightening up their credit policy, allowing customers 40 days rather than 62 to pay their bills. With a stricter credit policy in place, sales will fall by 10%, but the average collection period will drop to 40 days and the bad debts percentage will fall to 1%. Determine whether the company should make this change if their cost of capital is 1.1% per month. (Note: Use a 365-day year.) The cost from a decrease in sales is $ 1400000 (Round to the nearest dollar.) The additional profit from the decreased marginal investment in A/R is $ (Round to the nearest dollar.) Accounts receivable changes Tara's Textiles currently has credit sales of $20 million per month, an average collection period of 62 days, and bad debts equal to 4.5% of sales. Assume that the price of Tara's products is $60 per unit and that the variable costs are $53 per unit. The firm is considering tightening up their credit policy, allowing customers 40 days rather than 62 to pay their bills. With a stricter credit policy in place, sales will fall by 10%, but the average collection period will drop to 40 days and the bad debts percentage will fall to 1%. Determine whether the company should make this change if their cost of capital is 1.1% per month. (Note: Use a 365-day year.) The cost from a decrease in sales is $ 1400000 (Round to the nearest dollar.) The additional profit from the decreased marginal investment in A/R is $ (Round to the nearest dollar.)