Answered step by step
Verified Expert Solution
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
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
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started