| a) Effective Annual Rate (EAR) | | | b) Average Collection Period | | | c) One-Time Client |
| Notional purchase | | | Gross revenue | | | Repair cost |
| Discount (%) | | | Avg. receivables before new policy | | | Default probability |
| Days difference |
alfonso canella: alfonso canella:
Difference in days from paying to get discount to paying with no discount | | % paying early | | | NPV of client |
| | | | Avg. receivables after new policy | | | Break-even probability |
| Discount ($) | | | Change in receivables | | | Extend credit if probability of getting paid is higher than |
| Rate (%) | | | Cost of capital |
| Days difference in 1 year | | | Projected savings in capital costs |
| | | | minus: discounts |
| EAR | | | Projected savings net of discounts |
| | | | Gross margin |
| | | | Gross revenues must rise by: |
| | | | - in dollars |
| | | | - in percent |
Writing Wonders
MGMT332_Excel_Template_81.xlsx
