Slow Roll Drum Co. is evaluating the extension of credit to a new group of customers. Although these customers will provide $198,000 in additional credit sales, 13 percent are likely to be uncollectible. The company will also incur $16,300 in additional collection expense. Production and marketing costs represent 71 percent of sales. The firm is in a 35 percent tax bracket. No other asset buildup will be required to service the new customers. The firm has a desired return of 12 percent. Assume the average collection period is 90 days.

a. Compute the return on incremental investment.