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Problem 3.LO3.20 (similar to) Lyou's Furniture is advertising a Hot Ho! Hold the Payments for 2 Full Yearst sale. Lyou's advance factors all of its
Problem 3.LO3.20 (similar to) Lyou's Furniture is advertising a "Hot Ho! Hold the Payments for 2 Full Yearst" sale. Lyou's advance factors all of its receivables to Citibank Citibank has credit checking terminals in all of the company's stores. Once a customer is approved, Citibank assumes the liability of collecting the receivable from the customer (in 2 years) and immediately advances you's a percentage of the sale price. If Citibank wants to earn 13% on invested funds to cover the cost of capital and default risk, then what percentage of the purchase price will it tace to you? What percentage of the purchase price will Citibank advance to Lyou's? % (Round to two decimal places)
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