In the chapter opener, you learned about FastPay, a company that lends to online ad publishers based
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In the chapter opener, you learned about FastPay, a company that lends to online ad publishers based on advertising receivables. Suppose that you are running a business that relies on online ad revenues. It typically takes 60 days to collect from your customers and convert receivables into cash. FastPay offers you $150,000 in cash in exchange for the right to collect $155,000 in receivables from a particular customer. You have a bank line of credit that allows you to borrow on a short-term basis at an annual interest rate of 7 percent. Should you borrow on the credit line or accept the offer from FastPay?
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Related Book For
Principles Of Managerial Finance
ISBN: 9781292018201
14th Global Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
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