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Question 3 Mansor Carpet Repairs is trying to decide whether it should relax its credit standards. The firm repairs 60,000 carpets per year at an average price of RM30 each. Bad debt expenses are 2% of sales, the average collection period is 45 days and the variable cost per unit is RM26. If credit standards are relaxed, the company expects that bad debts will increase to 3% of sales and that the average collection period will increase to 55 days. Sales will increase by 6,000 repairs per year. Required: If the firm has a required rate of return on investments of 15%, what would you recommend the firm to do