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FIN2230 Chapter 7 Assignment 4 28C Sunny Mc Graw Hill Saved b. Compute the accounts receivable collection costs and production and selling costs and

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FIN2230 Chapter 7 Assignment 4 28C Sunny Mc Graw Hill Saved b. Compute the accounts receivable collection costs and production and selling costs and add the two figures together. Collection cost Production and selling costs Total costs related to accounts receivable. $ $ c. Compute the costs of carrying Inventory. Cost of carrying inventory $ d. Compute the amortization expense on new plant and equipment. Amortization expense e. Add together all the costs in parts b, c, and d. Total cost $ f. Compute income after taxes. Income after taxes $ g. If the firm has required return on investment of 19 percent, should it undertake the promotional campaign described throughout this problem? O Yes Dll FA Q Search Prev 4 of 6 Next > Help Save & prisc impec home dbut end delete fin insert F6 FX F8 FO F10 FI ENG US Mc Graw Hill Yes O No Problem 7-27 In the previous problem, if inventory had only been 2 times: a. What would be the new value for inventory investment? Inventory investment $ b.1 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. (Round the final answer to 1 decimal place.) Rate of return % b.2 Should the campaign be undertaken? O Yes O No F3 11 < Q Search F6 FS F4 & < Prev 4 of 6 Next > F7 prisc impcr home dbut end fin F8 F9 FIO FIT FAZ insert ancumbeducation.com/ex/map/index.html? con con&external_browser=0&launchUrl=https%253A%252F%252Flms.mheducation.com%252Fmghmiddleware252Fproducts FIN2230 Chapter 7 Assignment i Saved 4 Problem 7-26 Apollo Data Systems is considering a promotional campaign that will increase annual credit sales by $556,000. The company has a 40% cost of goods sold and will require investments in accounts receivable, Inventory, and plant and equipment. The turnover for each is as follows: Accounts receivable Inventory Plant and equipment 5x 8x 2x All $556,000 of the sales will be collectible. However, collection costs will be 2 percent of sales, and production and selling costs will be 71 percent of sales. The cost to carry inventory will be 10 percent of inventory. Amortization expense on plant and equipment will be 8 percent of plant and equipment. The tax rate is 30 percent. Inventory is calculated using cost of goods sold and not sales. 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? Accounts receivable. Inventory Plant and equipment Total Investment $ $ $ b. Compute the accounts receivable collection costs and production and selling costs and add the two figures together. Collection cost Production and selling costs Search $ < Prev 4 of 6 Next > Help Sa

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