Problem 7-19 Credit policy decision with changing variables [LO7-4] Fast Turnstiles Co. is evaluating the extension of credit to a new group of customers. Although these customers will provide $540,000 in additional credit sales, 15 percent are likely to be uncollectible. The company will also incur $18,100 in additional collection expense. Production and marketing costs represent 72 percent of sales. The firm is in a 30 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 12 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? O Yes O NO b-1. Calculate the incremental income after taxes if 18 percent of the new sales prove to be uncollectible. Incremental income after taxes b-2. Calculate the return on incremental investment if 18 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 18 percent of the new sales prove uncollectible? O Yes O No c-1. Calculate the return on incremental investment if the receivables turnover drops to 1.6 and 15 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 1.6 and 15 percent of the accounts are uncollectible? O Yes O No