b. Argo's maintenance service business grosses some $33M per year before discounts and its average days receivable is 20 (unlike the overall business where this number is ~15). If 20% of Argo's clients opt to pay earlier and get the 1.1% discount, what will be the change in the service business's receivables? If Argo's cost of capital is 6%, what are the projected savings of this change in policy? If Argo's gross margin is 33%, by how much will gross dollar revenues have to rise to offset the loss from discounts? In percent?

IMPORTANT: PLEASE SHOW FORMULAS USED TO CALCULATE

b) Average Collection Period Gross revenue Avg. receivables before new policy % paying early Avg. receivables after new policy Change in receivables Cost of capital Projected savings in capital costs minus: discounts Projected savings net of discounts Gross margin Gross revenues must rise by: - in dollars - in percent b) Average Collection Period Gross revenue Avg. receivables before new policy % paying early Avg. receivables after new policy Change in receivables Cost of capital Projected savings in capital costs minus: discounts Projected savings net of discounts Gross margin Gross revenues must rise by: - in dollars - in percent