Flip & Dip Real Estate Inc. is evaluating the option of selling on credit to a new group of customers. The new customers would generate incremental sales of $193,000 per year, of which 8% will not be collected due to customer default.

The additional sales will require additional collection costs of $19,300 per year. Production costs account for 69% of sales. Turnover metrics are as follows:

Asset	Turnover
Accounts receivable	8x
Inventory	3x
Fixed assets	6x

There is no depreciation effect. The firm has a marginal tax rate of 21%.

1. What is the additional annual after-tax income from the new customers?
2. What is the required investment in assets to support the additional sales?
3. What is the return on the investment?