The three companies shown below have gathered data to determine whether they should factor their accounts receivable.

Required:
Prepare calculations to determine whether any of these companies would be better off to factor its receivables.

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One Ltd. $3,000,000 70 $100,000 10% 5% 70% 4% 30 Annual accounts receivable credit administration savings $3,000 Average annual accounts receivables Average collection period in days Annual bad debt write-offs Marginal interest rate for accounts receivable % factor fee on receivables % of receivables advanced by factor Interest rate charged by factor Reduced collection period with factor in days Two Ltd. $750,000 90 $40,000 12% 8% 90% 2% 20 $5,000 Three Ltd. $1.500,000 100 $25,000 9% 6% 85% 3% 25 $3,000