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The annual turnover of Hydra Valves Ltd is Rs.75 lacs, of which 80% is on the credit of one-month Factors Ltd is a factoring firm

The annual turnover of Hydra Valves Ltd is Rs.75 lacs, of which 80% is on the credit of one-month Factors Ltd is a factoring firm which is likely to give 90% of the bills raised on credit for a fee of 2% per month plus an additional commission of 3% on the total debt amounts which would result in the company saving Rs 60,000 annually in managing costs. and avoidance of bad debts of 1% of credit sales. A bank is willing to give a credit facility of 90% of the debts at an annual interest rate of 15% with a processing fee of 2% of the debts

Which offer should be accepted?

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