East Shore Inc has an ACP of 60 days and daily credit sales of $75,000 A factor offers a 60 day accounts receivable loan equal to 90 percent of accounts receivable The quoted interest rate is 10 percent and the commission fee is 1 5 percent of accounts receivable of the firm As a result, the firm w...

AR ACP daily credit sales 60 75000 4500000 Loan amount 09 ...

East Shore Inc. has an ACP of 60 days and daily credit sales of $75,000. A factor

Question:

East Shore Inc. has an ACP of 60 days and daily credit sales of $75,000. A factor offers a 60-day loan equal to 90 percent of The quoted interest rate is 10 percent and the commission fee is 1.5 percent of of the firm. As a result, the firm will save $3,000 and have a 1 percent reduction in bad debt losses, which are $500,000. What is the effective annual cost of the factor arrangement?

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...