Question $1(24$ Marks$)$Gibson owns a takeaway shop on the corner of Long Street in Cape Town. Gibsonhas made special arrangements with some of his customers to purchase piesthroughout the month, where he collects the money after $30$ days.Gibson reckons that if he informs his customers that he will give them a collectionperiod of $45$ days instead of the current $30,$ his credit sales will increase from $6842$pies in the previous financial year to $12632$ pies.Gibson knows that implementing a more lenient policy will increase his bad debts from$1\%$ of credit sales to $2\mathrm{.}5\%$ of credit sales.Gibson does not currently give discounts, but he estimates that $40\%$ of his totalcustomers will make use of this if he implements a discount policy of a $5\%$ discount ifhis customers pay within $10$ days. The selling price of a pie is R$13\mathrm{.}50,$ and the variablecost per pie is R$5.$ Use $360$ days per year and $30$ days per month.Gibson has a required return on investment of $12\%.$NB: Use the scenario above to answer the following questions. Round off to thenearest rand where applicable$\mathrm{.}1\mathrm{.}1$ Consider the information above on sale and determine its effect on total profit.$(4$ marks$)1\mathrm{.}2$ Calculate the cost of marginal investment in accounts receivable. $(11$ marks$)1\mathrm{.}3$ Calculate the effect on bad debts. $(4$ marks$)1\mathrm{.}4$ Calculate the cost of the settlement discount $(3$ marks$)1\mathrm{.}5$ If Gibson had a net increase in profit under the proposed credit terms, make arecommendation if he should implement the new credit terms or not the option you arerecommending.