Lei Company enters into an agreement with a firm that will buy Lei Company's accounts receivables...

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Lei Company enters into an agreement with a firm that will buy Lei Company's accounts receivables and assume the risk of collection. Details about the agreement are as follows: Average amount of receivables to be factored each month Average collection period Amount to be advanced by the factor Interest rate, deductible in advance Factor's fee, deductible in advance Annual savings of Lei Company in collection expenses 81. How much is the monthly net proceeds from factoring the receivables? P500,000 82. What is the annual net cost of factoring? 60 days 80% of the face amount of the receivables 10% p.a. 2% P60,000 83. What is the effective annual cost rate of financing? 84. If the interest change and factor's fee is not deducted in advance, the effective annual cost rate is? Lei Company enters into an agreement with a firm that will buy Lei Company's accounts receivables and assume the risk of collection. Details about the agreement are as follows: Average amount of receivables to be factored each month Average collection period Amount to be advanced by the factor Interest rate, deductible in advance Factor's fee, deductible in advance Annual savings of Lei Company in collection expenses 81. How much is the monthly net proceeds from factoring the receivables? P500,000 82. What is the annual net cost of factoring? 60 days 80% of the face amount of the receivables 10% p.a. 2% P60,000 83. What is the effective annual cost rate of financing? 84. If the interest change and factor's fee is not deducted in advance, the effective annual cost rate is?

Answer rating: 100% (QA)

81 The amount to be advanced by the factor is 80 of the face amount of the receivables so Lei Company will receive P500000 x 80 P400000 The factors fe... View the full answer