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Badakat Bunglers factors all its accounts receivables. The factoring agreement they have concluded is a 10% reserve is held and a 3% commission is charged

Badakat Bunglers factors all its accounts receivables. The factoring agreement they have concluded is a 10% reserve is held and a 3% commission is charged on the book value of the account. Further interest is charged at 2% per month (24% pa) on advances. Badakat wants to factor an account of R8 000 that falls due in 30 days.

7.8.1. What is the advance that Badakat will receive?

7.8.2. What is the net cost to Badakat?

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