[30] QUESTION TWO 2.1 Bull Brand Ltd has annual, non-seasonal credit sales of R2 600 000. Customers are expected to pay within 30 days, but in fact have been settling in an average of 42 days. Bull Brand Ltd experiences a bad-debt rate of 0.8% of debtors annually. The company's current overdraft facility is 2.5% above base-rate, which is at present 12%. Unfortunately, the overdraft limit has nearly been reached, and is unlikely to be extended. Bull Brand Ltd has contacted Buck Ltd, a factoring firm, and has been quoted: a) A factor charge of 1.8% of credit sales (Bull Brand estimates that this would save R20 000 administration costs per year) b) An advance of 75% of invoices at 3% over base-rate. Should Buck's terms be agreed to? (Support your answer with calculations). (15)