JOY Help Save 4 Problem 7-21 Credit policy and return on investment (L07-4) Global Services is considering a promotional campaign that will increase annual credit sales by $500,000. The company will require investments in accounts receivable, Inventory, and plant and equipment. The turnover for each is as follows: Accounts receivable Inventory Plant and equipment 4 times 8 times 2 times Book Hint All $500,000 of the sales will be collectible. However, collection costs will be 6 percent of sales, and production and selling costs will be 70 percent of sales. The cost to carry inventory will be 8 percent of inventory. Depreciation expense on plant and equipment will be 15 percent of plant and equipment. The tax rate is 35 percent a. Compute the investments in accounts receivable, inventory, and plant and equipment based on the turnover ratlos. Add the three together Print References Accounts receivable Inventory Plant and equipment Total investment Help 4. b. Compute the accounts receivable collection costs and production and selling costs and then add the two figures together 10 points Collection cost Production and selling costs Total collection, production, and selling costs eBook 1 Hint Print c. Compute the costs of carrying inventory Cost of carrying Inventory ho Hences d. Compute the depreciation expense on new plant and equipment Depreciation Expense ht e. Compute the total of all costs from parts b through d. unt Total costs rences f. Compute income after taxes. Income after taxes NOS g-1. What is the aftertax rate of return? (Input your answer as a percent rounded to 2 decimal places.) Attertax rate of return g-2. If the firm has a required return on investment of 12 percent, should it undertake the promotional campaign described throughout this problem? No Yes