Use the information provided below to answer the following questions: Redfern Traders is considering extending credit to

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Use the information provided below to answer the followingquestions:
Redfern Traders is considering extending credit to customers inanother district. Sales are expected to increase byR600 000 if credit is granted to these customers. From the newaccounts receivable generated, 15% is expected tobe uncollectible. Additional collection costs are forecast at 8% ofsales. The goods are expected to be sold at costplus 50%. The firm is in the 30% tax bracket.
1. Calculate the after-tax profit on the new sales.
2. Suppose the only new investment in this case is the build-upin accounts receivable and that the turnover ratio is 5:1 betweensales and accounts receivable. If the minimum required after-taxreturn is 15%, is this an acceptable investment? Motivate youranswer.