Question: Anisley Elevators Inc. has decided to increase it's sales by opening another location in BC to service office buildings. The firm expects an additional $17

 Anisley Elevators Inc. has decided to increase it's sales by opening

Anisley Elevators Inc. has decided to increase it's sales by opening another location in BC to service office buildings. The firm expects an additional $17 million in sales with the extra location but they also recognize that 8.5% of its sales will ultimately be uncollectible. In addition, collection costs will increase to 13% on all new sales and the firm's service costs will be 68% of sales. Selling expenses are 8% of sales and Laptech has an opportunity cost of funds (before tax) of 11%. Laptech can turn its receivables 5 times per year. Is it worthwhile for Ainsley to open the second location in BC ? (Hint: Calculate the incremental change in benefits from a change in credit policy)

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