Annual credit sales of Nadak Co. total $355.2 million. The firm gives a 1.75% cash discount for payment within 10 days of the invoice date; 90% of Nadak's accounts receivable are paid within the discount period.

Required:

a. What is the total amount of cash discounts allowed in a year? (Enter your answer in millions rounded to 2 decimal places.)

Answer -- 5.59 Mil

b. Calculate the approximate annual rate of return on investment that Nadak Co.s cash discount terms represent to customers who take the discount. (Assume a credit period of 30 days and 360-days year). (Round intermediate calculations to 2 decimal places. Enter your answer as a percentage rounded to 1 decimal place (i.e., 32.1).)

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