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CASE 2: RFL manufacturing specialises in the manufacturing and distribution of items used in the kitchen appliances. Among its many products are microwave ovens, plastic products, and others etc. In most recent fiscal year, its sales were Tk 20 million at the end of the year. Historically the firm shipped out its good with 30 day pay period allowed with no cash discount offered and total sales are Tk 1,000,000. The receivables were based on average daily credit sales of $27,137 per year. The company now wants to offer cash discounts given in the table 1 below: Table 1: Cash Discount Alternative Terms Condition 1/10, net 30 15% of customers would take advantage of the 1% discount by paying within 10 days. Remaining paid within 30 days. 22/10, net 3025% of customers would take advantage of the 2% discount by paying within 10 days. Remaining paid within 30 days. 1 The company computed the new average collection period based on the discount policy. With an assumption of average daily credit sales of $27,137 per day, the company computed the anticipated new accounts receivable could be used elsewhere in the corporation to earn a return of 20 percent. Requirements: (a) Compute the new average collection period based on the term in Table 1 and the results of the pilot study. (1) Assuming the average daily credit sales remain at $27,137 per day what will be the new accounts receivable balance based on new cash discount policies? (e) Compute the cost of cash discount based on the two policies under consideration. Recall that the total credit sales were $20 million. (a) Compute the amount of freed up funds based on the two cash discount policies. (e) Assuming 20 percent return can be earned with the freed up funds, what is the return that can be earned under the two discount policies? ( Determine the actual profitability or loss under two discount policies. Which of the policy is most profitable