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XYZ had sales of $60,000 for the previous year. Receivables at the year-end were $15,000 and the cost of financing the receivables is covered by an overdraft with an interest rate of 7% pa. They are now considering offering a cash discount of 4% for payment of debt within 10 days.
Calculate the annualised cost of offering the discount.
Can someone please help with this question?
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