document.write( "Question 1133084: would extend trade credit to some customers that previously have been denied credit because they were considered poor risks. Sales are projected to increase by $120,000 per year if credit is extended to these new customers. Of the new accounts receivable generated, 6% are projected to be uncollectible. Additional collection costs are projected to be 5% of incremental sales, and production and selling costs are projected to be 80% of sales. Your firm expects to pay a total of 30% of its income after expenses in taxes.\r
\n" ); document.write( "\n" ); document.write( "1) Compute the incremental income after taxes that would result from these projections:
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Algebra.Com's Answer #750284 by Theo(13342)\"\" \"About 
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additional gross income is 120,000.
\n" ); document.write( "6% is not collectible = .06 * 120,000 = 7,200.
\n" ); document.write( "5% is additional expense required for collecting = .05 * 120,000 = 6,000.
\n" ); document.write( "80% involves production and selling costs = .8 * 120,000 = 96,000.\r
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\n" ); document.write( "\n" ); document.write( "total expenses are 7,200 + 6,000 + 96,000 = 109,200.
\n" ); document.write( "net income is therefore 120,000 - 109,200 = 10,800.
\n" ); document.write( "tax on that is 30% = 3,240.
\n" ); document.write( "incremental income is therefore 10,800 - 3,240 = 7,560.\r
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\n" ); document.write( "\n" ); document.write( "that's what i get if all the costs are based on percentages of the incremental sales.\r
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