Mandaue Company, a furniture manufacturer, supplies its products to retail outlets in Metro Manila. It grants a 30-day credit term to these retail outlets. A large retailer, Apo Inc., purchases an average of Php 500,000 per week. The contribution margin on sales to Apo is 40%. Companys sales agents are paid on commission basis at 6% of sales. Mandaue Company is experiencing liquidity problems lately. Thus, management is considering the following options to reduce its receivables: a. Factor its receivables from Apo Inc. at 3% per month. The financing company will grant a maximum amount of 70% of the face value of receivables. b. Require Apo Inc. to pay a down-payment equivalent to 50% of invoice price at order date with a sales discount on the invoice price of 6%.