Problem 7-19 (Algo) Credit policy decision with changing variables [LO7.4] Fast Turnstiles Company is evaluating the extension of credit to a new group of customers. Although these customers will provide $360,000 in additional credit sales, 14 percent are likely to be uncollectible. The company will also incur $17,200 in additional collection expense. Production and marketing costs represent 74 percent of sales. The firm is in a 20 percent tax bracket and has a receivables turnover of six times. No other asset buldup will be required to service the new customers. The firm has a 12 percent desired retum. a-1. Calculate the incremental income after taxes. 0.2. Calculate the retum on incremental investment Note: Input your answer os a percent rounded to 2 decimal places. a-3. Should Fast Turnstiles Company extend credit to these customers? Yes No b-1. Calculate the incremental income after taxes if 17 percent of the new sales prove to be uncollectible. b-2. Calculate the return on incremental investment if 17 percent of the new sales prove to be uncollectible. Note: Input your answer as a percent rounded to 2 decimal places. b-3. Should credit be extended if 17 percent of the new sales prove uncollectible? Yes No c-1. Calculate the return on incremental investment if the receivables turnover drops to 20 and 14 percent of the accounts are uncollectible. Note: Input your answer as a percent rounded to 2 decimal ploces. c.2. Should credit be extended if the receivables tumover drops to 2.0 and 14 percent of the accounts are uncollectible? Yes No