The Warren Motor Company sells $30 million of its product to wholesalers on terms of net 30. Currently, the firms average collection period is 48 days. In an effort to speed up the collection of receivables, Warren is considering offering a cash discount of 2% if customers pay their bills within 10 days. The firm expects 50% of its customers to take advantage of the discount and its average collection period to decline to 30 days. The companys opportunity cost is 16%. Determine the cost of the cash discounts to Warren Motor Company.

a)$300,000

b)$ 60,000

c)$ 40,000

d)$ 48,000