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Slow Roll Drum Co. is evaluating the extension of credit to a new group of customers. Although these customers will provide $432,000 in additional credit

Slow Roll Drum Co. is evaluating the extension of credit to a new group of customers. Although these customers will provide $432,000 in additional credit sales, 9 percent are likely to be uncollectible. The company will also incur $17,500 in additional collection expense. Production and marketing costs represent 77 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 desired return of 12 percent. Assume the average collection period is 180 days. Compute the return on incremental investment. (___%) Should credit be extended to the new group of customers? (Yes or No)

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