Sunny Coast Enterprises (). Sunny Cat Enterprises has sold a combination of films and DVD to Hong Kong Media Incorporated for US$113,000, with payment due in seven months Sunny Coast Enterprises has the following hematives for landing this receivable 1) Use its bank credit line Interest would be at the prime rate of 46% plus 150 basis points per annum 2) Use its bank credit line but purchase export credit insurance for a 115fee Because of the reduced risk the bank interest rate would be reduced to 46% per annum without any points in both cases Sunny Coast would need to maintain a compensating balance of 18% of the loan's face amount and no interest will be paid on the compensating balance by the bank 3)Sunny Coast Enterprises has been approached by a factor that offers to purchase the Hong Kong Media Imports receivable at a 16% per annum discount plus a charge for a non-recouse cause What are the annualized percentage all in costs of each alternative? b. What are the advantages and disadvantages of the factoring alternative compared to the atematives 1 and 2 (NOTE Assume a 360-day year) a. What are the annualkred percentage all-in costs of each atemative? Aternative 1 Bank Credit Line The bank interest expeme on recevable is Round to the nearest cert) Calculate the net proceeds below. Round to the nearest cent) 5 Face amount of receive Less bankinterest expense on recevable Less compensating balanceret si s En any number in the earth and then conut tot het gestion ROS.AM WW 5 8 W R T O m ACA S D F G H Sunny Coast Enterprises (B). Sunny Coast Enterprises has sold a combination of Sims and DVDs to Hong Kong Media Incorporated for US$113,000, with payment due in seven months Sunny Coast Enterprises has the following alternatives for financing this receivable 1) Use is bank credit line Interest would be at the prime rate of 46% plus 150 basis points per annum. 2) Use ts bank credit line but purchase export credit insurance for a 11% foe Because of the reduced is the bank interest rate would be reduced to 46% per annum without any points in both cases Sunny Coast would need to maintain a compensating balance of 18% of the loan's face amount and no interest will be paid on the compensating balance by the bank 3) Sunny Coast Enterprises has been approached by a factor that offers to purchase the Hong Kong Media imports receivable at a 16% per annum discount plus a charge for a Oecordouse What are the analized percentage all in costs of each alternative? b. What are the advantages and disadvantages of the factoring ahorative compared to the ahoratives 1 and 2 NOTE Asume a day year) The amazed percentage all in cot WC) | Pound to three decimal places) Atentie 2 Bank Credit Line Export Credit Insurance The bank interes punts on the receivable is found to the nearest cant) Cate the nel proces below. Round to the restent 1 Sunny Coast Enterprises (). Sunny Cat Enterprises has sold a combination of films and DVD to Hong Kong Media Incorporated for US$113,000, with payment due in seven months Sunny Coast Enterprises has the following hematives for landing this receivable 1) Use its bank credit line Interest would be at the prime rate of 46% plus 150 basis points per annum 2) Use its bank credit line but purchase export credit insurance for a 115fee Because of the reduced risk the bank interest rate would be reduced to 46% per annum without any points in both cases Sunny Coast would need to maintain a compensating balance of 18% of the loan's face amount and no interest will be paid on the compensating balance by the bank 3)Sunny Coast Enterprises has been approached by a factor that offers to purchase the Hong Kong Media Imports receivable at a 16% per annum discount plus a charge for a non-recouse cause What are the annualized percentage all in costs of each alternative? b. What are the advantages and disadvantages of the factoring alternative compared to the atematives 1 and 2 (NOTE Assume a 360-day year) a. What are the annualkred percentage all-in costs of each atemative? Aternative 1 Bank Credit Line The bank interest expeme on recevable is Round to the nearest cert) Calculate the net proceeds below. Round to the nearest cent) 5 Face amount of receive Less bankinterest expense on recevable Less compensating balanceret si s En any number in the earth and then conut tot het gestion ROS.AM WW 5 8 W R T O m ACA S D F G H Sunny Coast Enterprises (B). Sunny Coast Enterprises has sold a combination of Sims and DVDs to Hong Kong Media Incorporated for US$113,000, with payment due in seven months Sunny Coast Enterprises has the following alternatives for financing this receivable 1) Use is bank credit line Interest would be at the prime rate of 46% plus 150 basis points per annum. 2) Use ts bank credit line but purchase export credit insurance for a 11% foe Because of the reduced is the bank interest rate would be reduced to 46% per annum without any points in both cases Sunny Coast would need to maintain a compensating balance of 18% of the loan's face amount and no interest will be paid on the compensating balance by the bank 3) Sunny Coast Enterprises has been approached by a factor that offers to purchase the Hong Kong Media imports receivable at a 16% per annum discount plus a charge for a Oecordouse What are the analized percentage all in costs of each alternative? b. What are the advantages and disadvantages of the factoring ahorative compared to the ahoratives 1 and 2 NOTE Asume a day year) The amazed percentage all in cot WC) | Pound to three decimal places) Atentie 2 Bank Credit Line Export Credit Insurance The bank interes punts on the receivable is found to the nearest cant) Cate the nel proces below. Round to the restent 1
