Question: I need help with solving this Fast Turnstiles Co. is evaluating the extension of credit to a new group of customers. Although these customers will

I need help with solving this

Fast Turnstiles Co. is evaluating the extension of credit to a new group of customers. Although these customers will provide $270,000 in additional credit sales, 9 percent are likely to be uncollectible. The company will also incur $16,700 in additional collection expense. Production and marketing costs represent 75 percent of sales. The firm is in a 35 percent tax bracket and has a receivables turnover of four 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.) Return on incremental investment a-3. Should Fast Turnstiles Co. extend credit to these customers? Yes No b-1. Calculate the incremental income after taxes if 12 percent of the new sales prove to be uncollectible. ncremental income after taxes b-2. Calculate the return on incremental investment if 12 percent of the new sales prove to be uncollectible. (Input your answer as a percent rounded to 2 decimal places.) Return on incremental investment % b-3. Should credit be extended if 12 percent of the new sales prove uncollectible? Yes O No c-1, Calculate the return on incremental investment if the receivables turnover drops to 2.0 and 9 percent of the accounts are uncollectible. (Input your answer as a percent rounded to 2 decimal places.) Return on incremental investment |% c-2. Should credit be extended if the receivables turnover drops to 2.0 and 9 percent of the accounts are uncollectible? No Yes
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