Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

A firm that often factors it's AR has an agreement with its finance company that requires the firm to maintain a 6% reserve and charges

A firm that often factors it's AR has an agreement with its finance company that requires the firm to maintain a 6% reserve and charges 1% commission on the amount of receivables. The net proceeds would be further reduced at an annual interstate charget of 10% on the money advanced. Assuming a 360-day year, what amount of cash ( rounded to the nearest dollar) will the firm receive from the finance company at the time a 100,000 account that is due in 90 days is turned over to the finance company?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started