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The management of XYZ Co has annual credit sales of $20m and accounts receivable of $4m. Working capital is financed by an overdraft at 12%

The management of XYZ Co has annual credit sales of $20m and accounts receivable of $4m. Working capital is financed by an overdraft at 12% interest per year. Assume 365 days in a year. What is the annual finance cost saving if the management reduces the collection period by 60 days?

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