Please provide this question solution general accounting Mountain Home Systems, Inc. is a well-known and reputablesupplier of integrated circuits to manufacturers oftelecommunications devices. The firm is currently debatingwhether to expand its sales to car-telephone manufacturers.While the firm expects an extra $2 million in sales if it enters thismarket, it also knows that 15% of its sales will ultimately beuncollectible. In addition, collection costs will be 2% on all newsales and the firm's production and selling costs are 80% of sales.Mountain Home's tax rate is 30%.a) Calculate Mountain Home's additional net income.b) If Mountain Home can turn its receivables over 4 times peryear, what will its additional investment in accounts receivable beand what will the firm earn as an after-tax return on thatinvestment?

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Answered: Mountain Home Systems, Inc. is a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 5P

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Phlight Restaurant is considering a delivery service. The firm expects that sales from the new service will be $150,000 per year. Phlight currently offers a sit-down service with annual sales of $100,000. While many of the delivery sales will be to new customers, Phlight estimates that 60% of their current sit-down customers will switch and use the delivery service. The level of incremental sales associated with introducing the delivery service is closest to: Select one: a. $90,000 b. $150,000 c. $60,000 d. $120,000
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