Question: Looking back at Tables 18.1 and 18.2, evaluate the impact on Bassetts pretax profits of extending full credit to the customers in Credit Risk Group

Looking back at Tables 18.1 and 18.2, evaluate the impact on Bassett’s pretax profits of extending full credit to the customers in Credit Risk Group 5. Assume that Bassett’s pretax required rate of return on inventory investments is 20 percent and that an additional inventory investment of $40,000 is required due to the anticipated sales increase from customers in Credit Risk Group 5.

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