XYZ plc has recently won a very large order to supply a retail chain, called TT Ltd, with items over the next two years. The size of any order may vary considerably and XYZ are obliged to deliver within two days of an order being placed. This will mean that XYZ has to invest heavily in stocks. TT Ltd also usually requires 90 days’ credit from any of its suppliers. XYZ are considering either debt factoring, loan financing, or offering TT Ltd a 3 per cent discount to settle within 10 days in order to meet its operational requirements. Calculate whether it is better for XYZ to offer the discount to get payment within 10 days or to finance its operational requirements via a loan. XYZ’s bank charges 12 per cent per annum for a loan.