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global services is considering a promotional campaign that will increase annual credit sales by $570,000 the...

global services is considering a promotional campaign that will increase annual credit sales by $570,000 the company will require investments in accounts receivable, inventory, and plant and equipment. the turnover for each is as follows:

accounts receivable... 3x

inventory... 6x

plant and equipment... 1x

all $570,000 of the sales will be collectible. However, collection cost will be 3 percent of sales, and production and selling costs will be 70 percent of sales. The cost to carry inventory will be 6 percent of inventory. depreciation expense n plant and equipment will be 5 percent of plant and equipment. the tax rate is 30 percent.

A. compute the investments in accounts receivable, inventory, and plant and equipment based on the turover ratios. add the three together.

Accounts Receivable- ?

Inventory- ?

Plant and Equipment- ?

Total investment- ?

B. compute the accounts receivable collection costs and production and selling costs and add the two figures together.

Collection cost- ?

Production and selling cost- ?

total collection, production and selling cost- ?

C. Compute the costs of carrying inventory.

D. compute the depreciation expense on new plant and equipment.

E. Compute the total of all costs from parts B, C, and D.

F. Compute income after taxes.

G1. What is the after tax rate of return?

Expert Solution

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jeff jeffy answered 1 year ago

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