The Reynolds Company buys from its suppliers on terms of $\frac{4}{10},$ net $64.$ Reynolds has not been utilizing the discount offered and has been taking $76$ days to pay its bills. The suppliers seem to accept this payment pattern, and Reynold's credit rating has not been hurt.

Mr$.$ Duke, Reynolds Company's vice$-$president, has suggested that the company begin to take the discount offered. Mr$.$ Duke proposes the company borrow from its bank at a stated rate of $18$ percent. The bank requires a $12$ percent compensating balance on these loans. Current account balances would not be available to meet any of this required compensating balance.

a$.$ Calculate the cost of not taking a cash discount. $($Use $365$ days in a year. Do not round intermediate calculations. Round the final answer to $2$ decimal places.$)$

Cost of not taking a cash discount $\%$

b$.$ Calculate the annual rate of interest if the company borrow from the bank. $($Use $365$ days in a year. Do not round intermediate calculations. Round the final answer to $2$ decimal places.$)$

Annual rate of Interest $\%$

c$.$ Do you agree with Mr$.$ Duke's proposal?

Yes

No