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Fast Turnstiles Company is evaluating the extension of credit to a new group of customers. Although these customers will provide $ 5 2 2 ,
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 Correct 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 Correct 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 No Yes Correct
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 Correct
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 Correct
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
No
Yes Correct
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