Please answer question3

2. BVC Corp.'s forecast sales and inventory purchases for the first three months of 2021 are given below. Based upon this and your analysis in problem 1, complete the accounts re- ceivable and accounts payable forecasts. Assume each month has thirty (30) days. a Forecast January Forecast March Forecast April E U Sales forecast Purchases forecast 360 240 330 210 320 240 C 4 Accounts receivable Beginning balance Sales Collections prior month Collections current month Sub-total collections Ending balance 165 360 -165 - 180 -345 180 180 330 -180 - 165 -345 165 165 320 - 165 - 160 -325 160 e ti S fi Accounts payable Beginning balance* Purchases Payments prior month Payments current month Sub-total payments Ending balance a 123 240 -123 -120 -243 120 120 210 -120 -105 -225 105 105 240 -105 - 120 -225 120 UL From the 12/31/2020 balance sheet 3. Refer again to the financial statements of BVC Corp. provided. Management have been "pitched" by FBN Factors Inc. FBN proposes to purchase ("discount") all of BVC Co's accounts receivable for 99 cents on the dollar. This would allow BVC Co. to collect 99% of its cash upon the day of the sale, rather than waiting until the end of the collection period. a. What annual rate of interest "APR") would BVC Corp. be paying to finance its receivables under this proposed factoring arrangement? % e b. Do you consider this proposal worthy of consideration? Explain in one brief sentence. BVC Co. Balance Sheet As of 12/31/20 BVC Co. Income Statement For the year ended 12/31/20 Cash Accounts receivable Inventory Current assets Accounts payable Revolving credit facility Current liabilities Working capital Net fixed assets Total assets 100 165 123 388 123 75 198 190 800 990 Sales Cost of goods sold Gross profit Operating expense Depreciation Total op exps EBIT Interest NIBT Income tax NIAT 4,000 3,000 1,000 700 100 800 200 50 150 50 100 Debt Equity Total capital 400 600 1,000 2. BVC Corp.'s forecast sales and inventory purchases for the first three months of 2021 are given below. Based upon this and your analysis in problem 1, complete the accounts re- ceivable and accounts payable forecasts. Assume each month has thirty (30) days. a Forecast January Forecast March Forecast April E U Sales forecast Purchases forecast 360 240 330 210 320 240 C 4 Accounts receivable Beginning balance Sales Collections prior month Collections current month Sub-total collections Ending balance 165 360 -165 - 180 -345 180 180 330 -180 - 165 -345 165 165 320 - 165 - 160 -325 160 e ti S fi Accounts payable Beginning balance* Purchases Payments prior month Payments current month Sub-total payments Ending balance a 123 240 -123 -120 -243 120 120 210 -120 -105 -225 105 105 240 -105 - 120 -225 120 UL From the 12/31/2020 balance sheet 3. Refer again to the financial statements of BVC Corp. provided. Management have been "pitched" by FBN Factors Inc. FBN proposes to purchase ("discount") all of BVC Co's accounts receivable for 99 cents on the dollar. This would allow BVC Co. to collect 99% of its cash upon the day of the sale, rather than waiting until the end of the collection period. a. What annual rate of interest "APR") would BVC Corp. be paying to finance its receivables under this proposed factoring arrangement? % e b. Do you consider this proposal worthy of consideration? Explain in one brief sentence. BVC Co. Balance Sheet As of 12/31/20 BVC Co. Income Statement For the year ended 12/31/20 Cash Accounts receivable Inventory Current assets Accounts payable Revolving credit facility Current liabilities Working capital Net fixed assets Total assets 100 165 123 388 123 75 198 190 800 990 Sales Cost of goods sold Gross profit Operating expense Depreciation Total op exps EBIT Interest NIBT Income tax NIAT 4,000 3,000 1,000 700 100 800 200 50 150 50 100 Debt Equity Total capital 400 600 1,000