XYZ, Inc., spends $300,000 per annum on its collection department. The company has $40 million in credit sales, its average collection period is 2.0 months, and the percentage of bad-debt losses is 3.0%. The company believes that, if it were to double its collection personnel, it could bring down the average collection period to 1.5 months and bad-debt losses to 2.5%. The added cost is $300,000, bringing total collection expenditures to $600,000 annually.

How much account receivable will be decreased if the expansion is adopted?

Group of answer choices

$1,333,333.33

None of them

$1,666,667

$833,333.33

Flag question: Question 6

Question 66 pts

How much bad-debt losses will be reduced if the expansion is adopted?

Group of answer choices

$200,000.00

$100,000.00

None of them

$400,000.00

Flag question: Question 7

Question 76 pts

At what opportunity cost will the expansion be break-even?

Group of answer choices

10.00%

None of them

6.00%

8.00%

12.00%