Problem 7.23 Railway Distributors is evaluating extending credit to a new group of customers. Although these customers will provide \\( \\$ 324,000 \\) in additional credit sales, 12 percent are likely to be uncollectible. The company will incur \\( \\$ 17,000 \\) in additional collection expenses. Production and marketing expenses represent 72 percent of sales. The company has a receivables turnover of four times. No other asset bulidup will be required to service the new customers. The firm has a 16 percent desired return on investment. a-1. Calculate the incremental income before taxes from this new group of customers. Incremental income before taxes a-2. Calculate the return on incremental investment. (Round the final answer to \\( \\mathbf{2} \\) decimal place.) Return on incremental investment a-3. Should Roilway Distributors extend credit to these customers? Yes No b-1. Calculate the incremental income before taxes from the new group of customers if 15 percent of the sales prove uncollectable. Incremental income before taxes b-2. Calculate the return on incremental investment if 15 percent of the new sales prove uncollectible. (Round the final answer to 2 decimal place.) Return on incremental investment \\% b-2. Calculate the return on incremental investment if 15 percent of the new sales prove uncollectible. (Round the final answer to 2 decimal place.) Return on incremental investment \\% b-3. Should credit be extended if 15 percent of the new sales prove uncollectible? Yes No c-1. Calculate the return on incremental investment if the receivables turnover drops to 1.6 and 12 percent of the accounts are uncollectible (as in part a)? (Round the final answer to \\( \\mathbf{2} \\) decimal places.) Return on incremental investment \\% c-2. Should credit be extended if the receivables turnover drops to 1.6 and 12 percent of the accounts are uncollectible (as in part a)? No Yes