They have been approached by a bank offering an invoice discounting facility. The facility is for a maximum drawdown of €2,000,000 and allows for an 80% advance rate on eligible invoices. The cost of the facility is a C27,000 pa fixed facility fee, and interest at 1.5%pa on drawn down amounts. For this offer to be a cost saving opportunity for Quickcash, what would be the minimum percentage of average trade debtors ruled as eligible for the facility?

They have been approached by a bank offering an invoice discounting facility. The facility is for a maximum drawdown of €2,000,000 and allows for an 80% advance rate on eligible invoices. The cost of the facility is a C27,000 pa fixed facility fee, and interest at 1.5%pa on drawn down amounts. For this offer to be a cost saving opportunity for Quickcash, what would be the minimum percentage of average trade debtors ruled as eligible for the facility?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 24P

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