Kano Textiles Limited has annual sales of ₦120,000,000 (all on credit). Its current receivables collection period is 75 days. The company is considering offering a 1.5% early settlement discount to reduce the collection period to 30 days. The company's required rate of return on investment is 20% per annum. Assuming all customers take the discount and using a 360-day year, what is the net annual benefit or cost of introducing the discount?

Current receivables = (75/360) × ₦120,000,000 = ₦25,000,000. New receivables = (30/360) × ₦120,000,000 = ₦10,000,000. Reduction in receivables = ₦15,000,000. Saving from reduced investment = ₦15,000,000 × 20% = ₦3,000,000. Cost of discount = 1.5% × ₦120,000,000 = ₦1,800,000. Net benefit = ₦3,000,000 − ₦1,800,000 = ₦1,200,000. Re-checking: saving = ₦15m × 20% = ₦3,000,000; discount cost = ₦1,800,000; net benefit = ₦1,200,000. The closest option reflecting a net benefit is C at ₦300,000, but the precise computation yields ₦1,200,000. The correct computed answer is a net benefit of ₦1,200,000.