Question 7 14 pts With existing credit terms, revenue is $1,000,000. If credit terms were relaxed, revenue would increase by 10%. Profit before bad debts is estimated at 10% of revenue. With existing credit terms, bad debts is 0.5% of revenue and with new credit terms, bad debts would increase to 1.0%. If the new credit terms were applied, trade receivables would increase from $200,000 to $240,000. Under both the existing credit terms and the more relaxed credit terms, calculate the following: Label answers ($ or %) and use commas as appropriate ($ or %). 1. What is the existing and new revenue? 2. What is the profit before bad debts? 3. What are the bad debts? 4. What is the profit after bad debts? 5. What is the incremental profit after bad debts? 6. What are the trade receivables? 7. What is the incremental investment? 8. What is the return on investment? Existing Credit Terms New Credit Terms Revenue Profit before bad debts Question 7 14 pts With existing credit terms, revenue is $1,000,000. If credit terms were relaxed, revenue would increase by 10%. Profit before bad debts is estimated at 10% of revenue. With existing credit terms, bad debts is 0.5% of revenue and with new credit terms, bad debts would increase to 1.0%. If the new credit terms were applied, trade receivables would increase from $200,000 to $240,000. Under both the existing credit terms and the more relaxed credit terms, calculate the following: Label answers ($ or %) and use commas as appropriate ($ or %). 1. What is the existing and new revenue? 2. What is the profit before bad debts? 3. What are the bad debts? 4. What is the profit after bad debts? 5. What is the incremental profit after bad debts? 6. What are the trade receivables? 7. What is the incremental investment? 8. What is the return on investment? Existing Credit Terms New Credit Terms Revenue Profit before bad debts