Please add working notes

Your finance group has been holding meetings to address the forecast decrease in revenues. The action plans include your lender's proposal to manage cash collections through the use of a direct deposit branch for all accounts receivable. The reasoning is cash will be deposited directly to the Companys account and therefore reduce interest costs on outstanding accounts receivable. The lender would then forward to you daily the summaries to enable internal accounting processing. Your President has asked you to analyze the overall strategy including the use of the direct deposit branch and determine if the benefits outweigh the costs. Key information is provided below:

Use 360 Days in a year for simplicity purposes.

Historical Revenues - $46,000,000

Forecast Total Revenues - revised customer base - $53,000,000

Next year credit terms - all sales - from current of 30 days to 45 days

Revised forecast collection days - all sales - from current of 12 times to forecast 9 times

Historical gross profit percentage earned 33% - all revenues

Forecast gross profit - revised product offering - 30% all revenues

Historical bad debt percentage - 4% on all historical revenues

Expected bad debt percentage to increase to 3.75% on revised total forecast revenue

Cost of capital - 14%

Bank direct deposit fee - $2400 per month

Additional administrative savings - per month - $900

Inventory levels increase by $700,000 to support new revenues

Trade payables increase $200,000 due to increased inventory

a) Prepare a schedule which summarizes the benefits versus costs of this plan and write a conclusion as to whether or not this plan is financially acceptable. Show all calculations.