Kyle Corporation needs P150,000 to funds its increasing sales demand.The company purchased the goods on account on
Question:
Kyle Corporation needs P150,000 to funds its increasing sales demand.The company purchased the goods on account on terms of 5/10, n/30.The company has three alternative sources funds as follows;
The company paid on discount period and use their revolving fund as payment of accounts payable in which it has an opportunity cost of 30%. _______________________________
Bank Loan; The firm's bank will lend P250,000 at 18%. A 10% compensating balance will be required.________________
Factor the account receivable of P150,000 per month, which the term of sale is 3/10 n/30.The factor will advance 75% of the face value of receivable at 15% on an annual basis.The factor also charge 2% fee on all receivable purchased._________________
Compute the cost of the above sources of funds.
Among the three alternatives; which alternative have a lowest cost?____________________