9: Invoice Discounting: Advance Ltd are looking to generate some positive cash flow in order to finance 500,000 to start a new business venture that is expected to yield a return on cash invested of 8%pa. They have an unutilised bank overdraft facility of 500,000 that costs 5%pa interest to draw down. Their existing business has 800,000 of average trade debtors. A merchant bank offers an invoice discounting facility. It costs a fixed 10,000pa and cash advanced under the facility is charged interest at 3%pa. It is expected that 75% of the trade debtors will be eligible for the facility and the bank are offering an 80% cash advance on the face value of eligible invoices. Assuming Advance do not have any additional cash to utilise and ignoring qualitative commercial factors, what is the optimal profit pa they can expect by financing their new venture? a) 14,600 b) 15,000 c) 15,600 d) 25,600