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 $162,000 in additional credit sales, 11 percent are likely to be uncollectible. The company will also incur $16,100 in additional collection expense. Production and marketing costs represent 70 percent of sales. The firm is in a 30 percent tax bracket and has a receivables turnover of five times. No other asset bulidup will be required to service the new customers. The firm has a 8 percent desired return. a-1. Calculate the incremental income after taxes. a-2. Calculate the return on incremental investment. Note: Input your answer as 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 14 percent of the new sales prove to be uncollectible. b-2. Calculate the return on incremental investment if 14 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 14 percent of the new sales prove uncollectible? Yes No c-1. Calculate the return on incremental investment if the receivables tumover drops to 1.6 and 11 percent of the accounts are uncollectible. Note: Input your answer as a percent rounded to 2 decimal places