all increase 25. b. Should credit be extended? omotional campaign that will inc Apollo Data Systems is considering a promo u will require investments in a annual credit sales by $600,000. The company whi ent. The turnover for each is a receivable, inventory, and plant and equipment. in accounts bis as follows Accounts receivable 5 x Inventory 8x Plant and equipment 2 x All $600,000 of the sales will be collectible. However, collection costs will be 3 percent of sales, and production and selling costs will be 77 percent of sales cost to carry inventory will be 6 percent of inventory. Amortization expense or and equipment will be 7 percent of plant and equipment. The tax rate is 30 percent a. Compute the investments in accounts receivable, inventory, and plant and equipment based on the turnover ratios. What is the total value of the investment made? xpense on plan b. Compute the accounts receivable collection costs and production and selling costs and add the two figures together. 3: Working Capital Management Compute the costs of carrying inventory. Compute the amortization expense on new plant and equipment. Add together all the costs in parts b, c, and d. Suhtract the answer from parte from the sales figure of $600,000 to arrive at income before taxes. Subtract taxes at a rate of 30 percent to arrive at income after taxes. o Divide the aftertax return figure in part fby the total investment figure in part a. If the firm has required return on investment of 12 percent, should it undertake the promotional campaign described throughout this problem? 26. In the previous problem, if inventory had been only four times, a. What would be the new value for inventory investment? b. What would be the return on investment? You need to recompute the total investment and the total costs of the campaign to work toward computing income after taxes. Should the campaign be undertaken? 25. Maddox Resources has credit sales of $180,000 yearly with credit terms of net 30 days, which is also the average collection period. Maddox does not offer a discou tolen the full 30 days to pay