Fast Turnstiles Co. is evaluating the extension of credit to a new group of customers. Although these customers will provide $540,000 in additional credit sales, 15 percent are likely to be uncollectible. The company will also incur $18,100 in additional collection expenses. Production and marketing costs represent 72 percent of sales. The firm is in a 30 percent tax bracket and has a receivables turnover of five times. No other asset buildup will be required to service the new customers. The firm has a 12 percent desired return.
a. Calculate the incremental income after taxes.
b. Calculate the return on incremental investment.
c. Should Fast Turnstiles Co. extend credit to these customers?
d. Calculate the incremental income after taxes if 18 percent of the new sales prove to be uncollectible.

The amberssen specialty company is a chain of twelve retail stores that sell a variety of imported gift items, gourmet chocolates, cheeses, and wines in the toronto area. amberssen has an is staff of three people who have created a simple but effective information system of networked point-of-sale registers at the stores and a centralized accounting system at the company head- quarters. harry hilman, the head of amberssens is group, has just received the following memo from bill amberssen, sales director (and son of amberssen’s founder). harry—it’s time amberssen specialty launched itself on the internet. many of our competitors are already there, selling to customers without the expense of a retail storefront, and we should be there too. i project that we could double or triple our annual revenues by selling our products on the internet. i’d like to have this ready by - giving, in time for the prime holiday gift-shopping season. bill after pondering this memo for several days, harry scheduled a meeting with bill so that he could clarify bill’s vision of this venture. using the standard con- tent of a system request as your guide, prepare a list of questions that harry needs to have answered about this project.

Ursus, inc., is considering a project that would have a five-year life and would require a $1,650,000 investment in equipment. at the end of five years, the project would terminate and the equipment would have no salvage value. the project would provide net operating income each year as follows (ignore income taxes.):

What would not cause duff beer’s production possibilities curve to expand in the short run? a. improved manufacturing technology b. additional resources c. increased demand