Question
Suppose the entertainment company adopts a reverse factoring program in which it sells its accounts payable to a factor (bank) in return for getting payment
Suppose the entertainment company adopts a reverse factoring program in which it sells its accounts payable to a factor (bank) in return for getting payment terms of Net 75 days. Based on the entertainment companys excellent credit rating, the factor will pay the bakery immediately and will only charge a 3% annual rate on the balance. How much will this save the bakery in annual interest charges? (Give your answer to the nearest whole dollar without commas, words or a dollar sign.)
Hint: note that the balance will change from part (1) because money will now spend 75 days in AR. So you need Littles Law again.
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