Hyper Retail Outlets sell goods on terms of net 40. The store's average monthly sales (all on
Fantastic news! We've Found the answer you've been seeking!
Question:
Hyper Retail Outlets sell goods on terms of net 40. The store's average monthly sales (all on credit) are $70,000. Hyper pledges all of its receivables to the bank, which advances 80% of the receivables at a rate of 2.5% above prime. The bank also charges a 1% processing fee on all receivables pledged. Hyper borrows the full amount possible, and the current prime rate is 5%. What is the annual rate of using this source of financing for one full year?
a. 21.8%
b. 23.5%
c. 22.5%
d.19.1%
Related Book For
Introduction to Operations Research
ISBN: 978-1259162985
10th edition
Authors: Frederick S. Hillier, Gerald J. Lieberman
Posted Date: