Question $2$

A company is considering factoring as a way of managing its trade receivables. It currently has a balance outstanding on trade receivables of R $2500000.$ It has annual sales revenue of R $15000000$ which occurs evenly throughout the year. Trade receivable are expected to continue at the same level for the next year.

The factor will advance $80\%$ of the invoiced sales and will charge interest at a rate of $10\%$ per annum.

Required:

The interest charge for the next year payable to the factor will be:

A$.$ R$50000$

B$.$ R$200000$

C$.$ R$300000$

D$.$ R$1200000$