Fast Turnstiles Co. is evaluating the extension of credit to a new group of customers. Although...

 
  

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Fast Turnstiles Co. is evaluating the extension of credit to a new group of customers. Although these customers will provide $504,000 In additional credit sales, 13 percent are likely to be uncollectible. The company will also Incur $17,900 In additional collection expense. Production and marketing costs represent 70 percent of sales. The firm is in a 35 percent tax bracket and has a receivables turnover of five times. No other asset buildup will be required to service the new customers. The firm has a 8 percent desired return. a-1. Calculate the Incremental Income after taxes. Incremental income after taxes a-2. Calculate the return on Incremental Investment. (Input your answer as a percent rounded to 2 decimal places.) a-2 Calculate the return on Incremental Investment. (Input your answer as a percent rounded to 2 decimal places.) Return on incremental investment % a-3. Should Fast Turnstiles Co. extend credit to these customers? Fast Turnstiles Co. is evaluating the extension of credit to a new group of customers. Although these customers will provide $504,000 In additional credit sales, 13 percent are likely to be uncollectible. The company will also Incur $17,900 In additional collection expense. Production and marketing costs represent 70 percent of sales. The firm is in a 35 percent tax bracket and has a receivables turnover of five times. No other asset buildup will be required to service the new customers. The firm has a 8 percent desired return. a-1. Calculate the Incremental Income after taxes. Incremental income after taxes a-2. Calculate the return on Incremental Investment. (Input your answer as a percent rounded to 2 decimal places.) a-2 Calculate the return on Incremental Investment. (Input your answer as a percent rounded to 2 decimal places.) Return on incremental investment % a-3. Should Fast Turnstiles Co. extend credit to these customers?