Question 25 (10 marks) a) A firm buys on terms of 2/8, net 45 days, if it chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its non-free trade credit? (Assume a 365-day year.) (2 marks) b) Christie Corporation is deciding whether to pursue a relaxed or restricted working capital investment policy. The firm's annual sales are expected to be $4,800,000, its debt and common equity are each 50% of total assets. EBIT is $150,000, the interest rate on the firm's debt is 8%. If the company follows a restricted policy, its total assets turnover will be 2.5. Under a relaxed policy its total assets turnover will be 2.2. If the firm adopts a restricted policy, how much lower would its interest expense be than under the relaxed policy? (8 marks)