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Problem 7-20 (Algo) Credit policy decision with changing variables [LO7-4] Slow Roll Drum Company is evaluating the extension of credit to a new group of

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Problem 7-20 (Algo) Credit policy decision with changing variables [LO7-4] Slow Roll Drum Company is evaluating the extension of credit to a new group of customers. Although these customers will provide $342,000 in additional credit sales, 13 percent are likely to be uncollectible. The company will also incur $17,100 in additional collection expense. Production and marketing costs represent 73 percent of sales. The firm is in a 35 percent tax bracket. No other asset buildup will be required to service the new customers. The firm has a 10 percent desired return. Assume the average collection period is 120 days. a. Compute the return on incremental investment. Note: Input your answer as a percent rounded to 2 decimal places. Use a 360-day year

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