ABC Maintenance Service

A.ABC FBO sells maintenance services to various private jet operators.For these, it demands payment within 30 days. It is considering changingthis policy to 0.66%/7, net 30. What is the implicit annual rate in the newpolicy? Use a notional purchase of $10,000.

B.ABC's maintenance service business grosses some $22M per year beforediscounts and its average days receivable is 30. If 15% of its clients opt tofollow the new policy, what will be the change in receivables? If ABC's WACCis 7.0%, what are the projected savings of the new policy? If its gross marginis 22%, by how much will gross dollar revenues have to rise to offset the lossfrom discounts? In percent?