Tanner Co.is a highly successful supplier of leather to manufacturers of leather goods.Tanner is considering expanding into the luxury auto seat market.It is estimated that although selling leather to auto manufacturers will bring additional annual sales of $700,000,a high 12% of those accounts will be uncollectible.The cost of conditioning and selling the leather is 70% of sales.Tanner has a receivables turnover of 5 times a year and its opportunity cost of funds (before-tax)is 15%.Should Tanner expand into the auto market?

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The Answer of Tanner Co.is a highly successful supplier of leather to manufacturers of leather goods.Tanner is considering expanding into the luxury auto seat market.It is estimated that although selling leather to auto manufacturers will bring additional annual sales of $700,000,a high 12% of those accounts will be uncollectible.The cost of conditioning and selling the leather is 70% of sales.Tanner has a receivables turnover of 5 times a year and its opportunity cost of funds (before-tax)is 15%.Should Tanner expand into the auto market?

Tanner Cois a Highly Successful Supplier of Leather to Manufacturers of of Leather