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Johnson Electronics is considering extending trade credit to some customers previously considered poor risks. Sales would increase by $220.000 if credit were extended to these

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Johnson Electronics is considering extending trade credit to some customers previously considered poor risks. Sales would increase by $220.000 if credit were extended to these new customers. Of the new accounts recelvable generated. 10 percent will prove to be uncollectible. Additional collection costs will be 5 percent of sales, and production and selling costs will be 70 percent of sales. The firm is in the 15 percent tax bracket. a. Compute the incremental income after taxes. b. What will Johnson's incremental return on sales be if these new credit customers are accepted? Note: input your answer as a percent rounded to 2 decimal places. c. If the accounts receivable turnover ratio is 4 to 1 , and no other asset oulidup is needed to serve the new customers. What will Johnson's incremental ieturn on new averoge investment be? Note: Do not round intermedlote caleulotions. Input your answer as o persent rounded to 2 decimal plases

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