c. Cost of factoring: The factor fee for the year would be The savings effected, however, would
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c. Cost of factoring: The factor fee for the year would be The savings effected, however, would be $18,000, giving a net factoring cost of $6,000. Borrowing $75,000 on the receivables would thus cost Bank borrowing would be the cheapest source of funds.
518 Part V L i q u i d i t y a n d Working Capital Management
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