Question: XYZ , Inc., spends $ 3 0 0 , 0 0 0 per annum on its collection department. The company has $ 4 0 million

XYZ, Inc., spends $300,000 per annum on its collection department. The company has $40 million in credit sales, its average collection period is 2.0 months, and the percentage of bad-debt losses is 3.0%. The company believes that, if it were to double its collection personnel, it could bring down the average collection period to 1.5 months and bad-debt losses to 2.5%. The added cost is $300,000, bringing total collection expenditures to $600,000 annually.
Part A
How much account receivable will be decreased if the expansion is adopted?
Group of answer choices
None of them
$1,666,667
$1,333,333.33
$833,333.33
Part B
How much bad-debt losses will be reduced if the expansion is adopted?
Group of answer choices
$400,000.00
$200,000.00
$100,000.00
None of them
Part C
At what opportunity cost will the expansion be break-even?
Group of answer choices
None of them
6.00%
12.00%
10.00%
8.00%

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