Question
Infinity Systems, Inc. is a well-known manufacturers of telecommunications devices. The firm is currently debating whether to expand its sales to car-telephone manufacturers. While the
Infinity Systems, Inc. is a well-known manufacturers of telecommunications devices. The firm is currently debating whether to expand its sales to car-telephone manufacturers. While the firm expects an extra $2.6 million in sales if it enters this market, it also knows that 11.5% of its sales will ultimately be uncollectible. In addition, collection costs will be 1.5% on all new sales and the firm's production costs are 72% of sales. Selling expenses are 9% of sales and Infinity systems has an opportunity cost of funds (before tax) of 30%. Infinity Systems can turn its receivables 5 times per year. Should Infinity Systems Co. enter the car-telephone manufacturer market?Explain in detail with supporting calculations. (Do not round off intermediate calculations. Round the final number to two decimal places
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