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A company is due to receive a payment of Kshs. 300,000 from a customer in 3 months time. To smooth its cash flows, the company
A company is due to receive a payment of Kshs. 300,000 from a customer in 3 months time. To smooth its cash flows, the company would prefer to receive the payment immediately and has agreed to transfer its entitlement to this payment to a third party (a discount house) in return for an immediate payment calculated using a rate of commercial discount of 16% per annum. How much will the immediate payment made by the discount house be?
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