Explain Accounts receivables

Collins Office Supplies is considering a more liberal credit policy to increase sales, but expects that 9 percent of the new accounts will be uncollectible. Collection costs are 5 percent of new sales, production and selling costs are 78 percent, and accounts receivable turnover is five times. Assume income taxes of 30 percent and an increase in sales of $80,000. No other asset build-up will be required to service the new accounts.

Given the income determined in part b and the investment determined in part d, should Collins extend more liberal credit terms