a$)$ Effective Annual Rate $($EAR$)$ b$)$ Average Collection Period Note: customers must pay within $20$ days of invoice. To get the discount, they must pay within $12$ days of invoice.

Notional purchase $1,000\mathrm{.}00$ Gross revenue $16,000,000$

Discount $(\%)0\mathrm{.}25\%$ Avg. receivables before new policy

Days difference $12\%$ paying early $30\mathrm{.}0\%$

Avg. receivables after new policy

Discount $($$$)$ Change in receivables

Rate $(\%)$ Cost of capital $7\mathrm{.}0\%$

Days difference in $1$ year Projected savings in capital costs

minus: discounts

EAR Projected savings net of discounts

Gross margin $30\mathrm{.}0\%$

Gross revenues must rise by:

$-$ in dollars

$-$ in percent

Note: customers must pay within $20$ days of invoice. To get the discount, they must pay within $12$ days of invoice.