I don't know where to start with this question, if it's possible to explain the process with the formulas, I would appreciate it, even better if it's in excel.

Piti Bank Corporation (PBC), a premier investment bank offers full-brokerage services to its current and prospecting clients. One of the services offered by PBC involves margin transactions, a service that allows clients and prospecting clients to borrow up to 50% of capital (money) to be invested in the equity and fixed income securities. By establishing margin accounts, PBC increases its gross revenues through investments in accounts receivables. Below are the current and proposed new credit policies of PBC.

Current credit policy:

Credit terms = Net 30.

Gross sales = $1,500,000.

90% (of paying customers) pay on Day 30.

10% pay on Day 35.

Bad debt losses = 2% of gross sales.

Operating cost ratio = 85%.

Cost of carrying receivables = 10%.

New credit policy:

Credit terms = 1/10, net 20.

Gross sales = $2,000,000.

60% (of paying customers) pay on Day 10.

30% pay on Day 15.

10% pay on Day 20.

Bad debt losses = 1% of gross sales.

Assume PBC makes the policy change, and TICIs Sales and Trading, Shorman Stanley and Union Brokers of Switzerland (PBC competitors) react by making similar changes. As a result, gross sales remain at $1,500,000.

1. How does this impact the firms after-tax profitability?

2. With sales remaining at $1,500,000 after the change in terms, the policy change would result in a slight incremental gain in net income of?

3. The margin loan contract between a prospecting client and the brokerage firm is called the hypothecation agreement. If the notional principal on the loan is $100,000 with 5.75% Discount Interest and 50% Compensating Balance (i.e., the investors equity in the transaction)

a. what is required face value of the loan at origination?

b. Interest payment per month is?

c. The compensating balance (i.e., the margin amount) is?

d. Usable funds?

e. Periodic interest rate?

f. EAR?

Thank you