I am currently working on a study guide and came across the following question.

Which of the following statements correctly reflects the effects of granting credit to customers?

a) total revenues may increase if both the quantity sold and the price per unit increase when credit is granted

b) a firm's cash cycle generally increases if credit is granted, all else equal

c) both the cost of default and the cost of discounts must be considered before granting credit

d) a firm may have to increase its borrowing if it decides to grant credit to its new customers

e) all of the above

My professor stated that the answer is all of the above, but after going through the readings and resources provided I could not find a way to understand how each answer is considered to be correct. I also e-mailed my professor and am waiting for a response, so I decided to post my question here as well.