Arvin Printers expects to have sales this year of P15 million under its current credit policy. The present terms are net 30; the days' sales outstanding (DSO) is 60 days; and the bad debt loss percentage is 5 percent. Also, Arvin's cost of capital is 15 percent, and its variable costs total 60 percent of slaes. Since Arvin wants to improve its profitability, a proposal has been made to offer a 2 percent discount for payment within 10 days; that is, change the credit terms to 2/10, net 30. The consultants predict that sales would increase by P500,000, and that 50 percent of all customers would take the discount. The new DSO would be 30 days, and the bad debt loss percentage on all sales would fall to 4 percent. (Assume a 360-day year.) 16. What would be the cost to Arvin of the discounts taken? a. P116,750 b. (P108,750) c. P155,000 d. P225,000 17. What would be the incremental bad debt losses if the change were made? a. P130,000 b. P250,000 c. -P250,000 (bad debt losses would decline) d. -P130,000 (bad debt losses would decline)