Problem 7-19 Henderson Office Supplies is considering a more liberal credit policy to increase sales, but it expects that 6 percent of the new accounts will be uncollectible. Collection costs are 4 percent of new sales, production costs are 77 percent, and accounts receivable turmover is 4 times. Assume an increase in sales of $68,000. No other asset buildup will be required to service the new accounts. a. What is the level of accounts receivable to support this sales expansion? Investment in accounts receivable b. What would be Henderson's incremental before-tax return on investment? Retum on incremental investment e. Should endersun lberalize credit if a 25 percent before-tax return is required? O Yes Assume Henderson also needs to increase its level of inventory to support new sales and that inventory tumover is 2 times. d. What would be the total incremental investment in accounts rejeivable and inventory to support a $68,000 increase in sales? Total incremental investment e. Given the income determined in part b and the investment determined in part d, should Henderson extend more liberal credit terms? Yes No References eBook & Resources ple format for... .docxCOMM2215 - Prog...doc