Assessment Question Question: 4 of 30 Status: Unanswered 1 hour 23 minutes 59 seconds The Frame Supply Company has just acquired a large account and needs to increase its working capital by $100,000 The controller of the company has identified the four sources of funds given below. 1. Pay a factor to buy the company's receivables, which average $125,000 per month and have an average collection period of 30 days The factor will advance up to 80% of the face value of receivables at 10% and charge a fee of 2% on all receivables purchased The controller estimates that the firm would save $24,000 in collection expenses over the year. Assume the fee and interest are not deductible in advance 2. Borrow S1 10,000 from a bank at 12% interest A 9% compensating balance would be required 3. Issue $110,000 of 6-month commercial paper to net $100,000. (New paper would be issued every 6 months.) 4 Borrow $125,000 from a bank on a discount basis at 20% No compensating balance would be required Assume a 360-day year in all of your calculations The cost of Alternative 1 to Frame Supply Company is OA, 100% OB. 16,0% OC, 132% D. 8.5% Directions Select the best answer Previous Next Review Items e to search