Question: Problem 7-20 Credit policy decision with changing variables (L07-4) Slow Roll Drum Coating the extension of credit to a new group of customers. Although these

Problem 7-20 Credit policy decision with changing variables (L07-4) Slow Roll

Problem 7-20 Credit policy decision with changing variables (L07-4) Slow Roll Drum Coating the extension of credit to a new group of customers. Although these customers will provide $432.000 In additional credit 9 percent are kely to be uncollectible. The company will also incur 517,500 in additional collection expense Production and macheng costs represent 77 percent of sales. The firm is in a 35 percent tax bracket. No other net buildup will be required to serve the new customers. The tom has a 12 percent desired return. Assume the average collection period is 180 days .. Compute the return on incremental investment input your answer as a percent rounded to 2 decimal places. Use . 360-day year) > . Should cheeded to the new group of customers? ON Yes

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