Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 2 Mirza Sdn Bhd is having cash flow problems due to current economic condition. The company plans to factor RM140,000 of its accounts receivable

image text in transcribed

Question 2 Mirza Sdn Bhd is having cash flow problems due to current economic condition. The company plans to factor RM140,000 of its accounts receivable to a factoring firm, saving RM600 per month in administrative costs. Any advance will be subject to a 12%annual interest rate, as well as a 10% reserve and a 2.5% processing fee from the factoring company. The payment period given to the company is 90 days. Assume a 360-day in a year. a Required: Assuming the factor agrees to give the maximum advance to the company, calculate the effective annual rate of interest to Mirza Sdn Bhd on the factoring arrangement

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Employment, Hours, And Earnings 2010 States And Areas

Authors: Sarah E. Baltic

5th Edition

1598884190, 9781598884197

More Books

Students also viewed these Accounting questions