Plans to liberalize the firms credit policy

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Reference no: EM13229824

The new credit manager of Kays departmet store plans to liberalize the firms credit policy. The firm currently generates credit sales of $575,000 annually. the more lenient credit policy is expected to produce credit sales of $750,000. The bad debt losses on additional sales are projected to be 5% despite an additional $15,000 collection expenditure. The new manager anticipates production and selling costs other than additional bad debt and collection expenses will remain at the 85% level. The firm is in 34% tax bracket

b-what would be kays incremental after-tax return on investment?

Reference no: EM13229824

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