Question 4:5 pointsChapter 15

The Piel Corporation was founded by a UAE fashionista and beauty blogger, Salama Al Ameri.

The business has begun by producing small quantities of unique ancient style, hand-made wallets and bags.

It has eventually grown to become a publicly listed company, trading on the Abu Dhabi Stock Exchange.

Last year, the firm generated a healthy Sales Revenue stream of $82,000, of which the companys end-of-year Accounts Receivable amounted to $20,000.

The applicable corporate tax rate applied to the Piel Corporation is currently 25%.

The management of the Piel Corporation is considering factoring out the firms Accounts Receivable to an external party to raise the cash needed to finance the companys growth and potential expansion into a new target market.

a. The factoring company imposes a 4% discount and charges an additional 0.5% for each expected 15-day average collection period over 25 days.

Calculate the dollar amount that the management of the Piel Co. would receive for their Accounts Receivable from the factoring company, if the firms collection period was 25 days or less.(1 point)

b. Estimate the dollar amount that the management of the Piel Co. would receive for their Accounts Receivable from the factoring company, if the firms average collection period was 70 days.(1 point)

c. Compute the average collection period (rounded to the nearest number), if the revenue generated had been evenly distributed throughout the year with the firms average Accounts Receivable. (1 point)

d. Using the average collection period from part (c) above, and given the original terms stated in part (a) of the question, calculate the dollar amount that the Piel Co. would receive for its Accounts Receivable from the factoring company.(1 point)

e. Compare and contrast the concepts of factoring and receivables financing in the context of corporate working capital management in a modern business environment. (1 point)

this is the full question with all the given