w accounts will be uncollectible en and selling costs are 78%, am me income taxes of 30% and a uildup will be required to servi y's incremental after-tax ret:
w accounts will be uncollectible en and selling costs are 78%, am me income taxes of 30% and a uildup will be required to servi y's incremental after-tax ret:
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter21: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 6P
Related questions
Question
![Honesty Company has been experiencing a decrease in sales for the past three months
since its competitor opened a shop right in front of Hail's store. To increase its sales, Hail
is considering a
expects that 9% of the new accounts will be uncollectible. Collection costs are
5% of new sales, production and selling costs are 78%, and accounts receivable
turnover is five times. Assume income taxes of 30% and an increase in sales of
P80,000. No other asset buildup will be required to service the new accounts.
liberal
credit policy However, by doing so,
more
it
What
would
be
Honesty's
incremental after-tax
return
investment?
on
Your answer](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbdec97ed-e6e8-49cc-bcbf-d8aabc422f32%2F048030c2-ea6e-4d93-b99c-e6a94eae605a%2Fd7w8xvg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Honesty Company has been experiencing a decrease in sales for the past three months
since its competitor opened a shop right in front of Hail's store. To increase its sales, Hail
is considering a
expects that 9% of the new accounts will be uncollectible. Collection costs are
5% of new sales, production and selling costs are 78%, and accounts receivable
turnover is five times. Assume income taxes of 30% and an increase in sales of
P80,000. No other asset buildup will be required to service the new accounts.
liberal
credit policy However, by doing so,
more
it
What
would
be
Honesty's
incremental after-tax
return
investment?
on
Your answer
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