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Mountain Home Systems Inc. is a well-known and reputable supplier of integrated circuits to manufacturers of telecommunications devices. The firm is currently debating whether to

Mountain Home Systems Inc. is a well-known and reputable supplier of integrated circuits to 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 million in sales if it enters this market, it also knows that 15% of its sales will ultimately be uncollectible. In addition, collection costs will be 2% on all new sales, and the firm's production and selling costs are 72% of sales. selling expenses are 8% of sales and mountain home has an opportunity cost of funds ( before-tax) of 20%. mountain home can turn its receivable 4 times per year Should the firm enter the car-telephone manufacturer market?

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