You have been asked to assess the expected financial impact of each of the following proposals to Improve the profitability of credit sales made by your company. Each proposal is Independent of the other. Answer all questions Type your answers in the table and submit this worksheet, showing your work may earn you partial credit. Iif you wish to show your work, please do so under each question below the table Your Answers: Proposal #1 Proposal #2 Proposal #1 would extend trade credit to some customers that previously have been denied eredt because they were conslidered poor risks. Sales are projected to lncrease by $150,000 per year if credit is extended to these new customers. Of the new accounts receivable generated, 7% are projected to be uncollectible. Additional colection costs are projected to be 1% of incremental sales (whether they actually end up collected or not. and production and selling costs ar. projected to be 80% a, sales. Yeur firm expects to pay a total of 40% of its lcome after expenses in 1) Compute the incremental income after taxes that would result from these projections the incremental Return on Sales if these new credit customers are accegted: If the receivable turnover ratio is expected to be 3 to 1 and so other asset tbuildup is meeded to serve the new customers 1) Compute the additional investmest in Accounts Receivable 4) Compute the incremental Returm on N sj,yo.company require.. 20% Rate e, Return .s investment for al.ropo ,als, do the-mber, .upge" "at MacBook Air 888 4 8 7 9 3 4 5 .A No If the recelvable turnover ratio is expected to be 3 to 1 and no other asset buldup is needed to serve the new customers Compute the additional Investment In Accounts Recelvable 3) Compute the Incremental Return on New Investment If your company requires a 20% Rate of Return on Investment for all proposals, do the numbers suggest that trade credit should be extended to these new customers? Explain. 5) Proposal 82 would establish local collection centers throughout the region to decrease the time it takes to convert credit payments that are maliled in by check to cash. It is estimated that establishing these collection centers would reduce the average collection time by 2 days. If the company currently averages $60,000 in collections per day, how many dollars will this suggested cash management system free up? 1) If all freed up dollars would be used to pay down debt that has an interest rate of 6%, how much money could be saved each year in interest expense? 2) Do the numbers suggest that this new system should be implemented if its total annusl Explain. 3) MacBook Air