Fast pls solve this question correctly in 5 min pls I will give u like for sure Surbh Poutine Cheez Company has yearly sales of $410,000 and an average collection period of 30 days. A factoring company is offering a 30-day receivables loan equal to 84% of the accounts receivable at 6.5% along with a commission fee of 0.75% of the receivables. The firm estimates that by taking the offer, it could save $150 in collection costs and 0.5% in bad debt costs, as a percentage of sales. What is the annual savings (in $ terms) of the arrangement to Poutine Cheez?
Fast pls solve this question correctly in 5 min pls I will give u like for sure Surbh Poutine Cheez Company has yearly sales of $410,000 and an average collection period of 30 days. A factoring company is offering a 30-day receivables loan equal to 84% of the accounts receivable at 6.5% along with a commission fee of 0.75% of the receivables. The firm estimates that by taking the offer, it could save $150 in collection costs and 0.5% in bad debt costs, as a percentage of sales. What is the annual savings (in $ terms) of the arrangement to Poutine Cheez?
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 33P
Related questions
Question
Fast pls solve this question correctly in 5 min pls I will give u like for sure
Surbh
Poutine Cheez Company has yearly sales of $410,000 and an average collection period of 30 days. A factoring company is offering a 30-day receivables loan equal to 84% of the accounts receivable at 6.5% along with a commission fee of 0.75% of the receivables. The firm estimates that by taking the offer, it could save $150 in collection costs and 0.5% in bad debt costs, as a percentage of sales. What is the annual savings (in $ terms) of the arrangement to Poutine Cheez?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning