Kim Mitchell, the new credit manager of the Vinson Corporation, was alarmed to find that Vinson sells on credit terms of net 90 days while

Kim Mitchell, the new credit manager of the Vinson Corporation, was alarmed to find that Vinson sells on credit terms of net 90 days while industry-wide credit terms have recently been lowered to net 30 days. On annual credit sales of $2.9 million, Vinson currently averages 111 days of sales in accounts receivable. Mitchell estimates that tightening the credit terms to 30 days would reduce annual sales to $2,150,000, but accounts receivable would drop to 38 days of sales and the savings on investment in them should more than overcome any loss in profit.Vinson's variable cost ratio is 82%, and taxes are 45%. If the interest rate on funds invested in receivables is 20%, should the change in credit terms be made?What is the effect of credit policy change? Round your answer to two decimal places