Global Services is considering a promotional campaign that will increase annual credit sales by $$450,000.$ The company will require investments in accounts receivable, inventory, and plant and equipment. The turnover for each is as follows:

$\backslash$table$[[$Accounts receivable,$2,$times$],[$Inventory$,6,$times$],[$Plant and equipment,$1,$time$]]$

All $$450,000$ of the sales will be collectible. However, collection costs will be $6$ percent of sales, and production and selling costs will be $71$ percent of sales. The cost to carry inventory will be $4$ percent of inventory. Depreciation expense on plant and equipment will be $5$ 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. Add the three together.

$\backslash$table$[[$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

Total collection, production, and selling costs