A company has annual credit sales of 10 million, and a cost of capital of 7%. At present the company's debtors take on average 45 days to pay for goods bought on credit. The company is considering a discount scheme which it estimates would reduce the period taken by customers to 25 days.

Based on the limited information above, what would be the net effect of the proposed discount scheme on the company's profit and loss in a given year? Assume 360 days in a year.

		Saving of 555,556
		Saving of 48,611
		Saving of 38,889
		Saving of 1,000