A firm is considering relaxing credit standards, which will result in annual sales increasing from P1.5 million to P1.75 million, the cost of annual sales increasing from P1,000,000 to P1,125,000, and the average collection period increasing from 40 to 55 days.  The bad debt loss is expected to increase from 1 percent of sales to 1.5 percent of sales.  The firm's required return on investments is 20 percent.  The firm's cost of marginal investment in accounts receivable is?

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A: Weighted average cost of capital is one of the method to calculate cost of capital for the firm. It…

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A: Please see below attached file

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Q: What is the firm value

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Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.