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Help Save & Exit 1 Johnson Electronics is considering extending trade credit to some customers previously considered poor risks Sales would increase by $190,000 if
Help Save & Exit 1 Johnson Electronics is considering extending trade credit to some customers previously considered poor risks Sales would increase by $190,000 if credit is extended to these new customers of the new accounts receivable generated, 7 percent will prove to be uncollectible. Additional collection costs will be 5 percent of sales and production and selling costs will be 78 percent of sales a. Compute the incremental income before taxes 10 points Skopped incremental income before taxes S b. What will the firm's incremental return on sales be if these new credit customers are accepted? (Round the final answer to 2 decimal place) Incremental return on sales c. If the receivable turnover ratio is 5to1 and no other asset buildup is needed to serve the new customers, what wil Johnson Electronics incremental return on new average investment be? (Do round intermediate calculations. Round the final answer to the nearest whole percentage) eos References Incremental return on new average investment G 11 Next > Typhoto smatch
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