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Fast Turnstiles Company is evaluating the extension of credit to a new group of customers. Although these customers will provide $ 1 9 8 ,
Fast Turnstiles Company is evaluating the extension of credit to a new group of customers. Although these customers will provide $ in additional credit sales, percent are likely to be uncollectible. The company will also incur $ in additional collection expense. Production and marketing costs represent percent of sales. The firm is in a percent tax bracket and has a receivables turnover of four times. No other asset buildup will be required to service the new customers. The firm has a percent desired return.
a Calculate the incremental income after taxes.
a Calculate the return on incremental investment.
Note: Input your answer as a percent rounded to decimal places.
a Should Fast Turnstiles Company extend credit to these customers?
multiple choice
Yes
No
b Calculate the incremental income after taxes if percent of the new sales prove to be uncollectible.
b Calculate the return on incremental investment if percent of the new sales prove to be uncollectible.
Note: Input your answer as a percent rounded to decimal places.
b Should credit be extended if percent of the new sales prove uncollectible?
multiple choice
Yes
No
c Calculate the return on incremental investment if the receivables turnover drops to and percent of the accounts are uncollectible.
Note: Input your answer as a percent rounded to decimal places.
c Should credit be extended if the receivables turnover drops to and percent of the accounts are uncollectible?
multiple choice
Yes
No
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