Tanzaniqe, Inc., sells $200,000 of its accounts receivable to factors at a 5 percent discount. The firms
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Tanzaniqe, Inc., sells $200,000 of its accounts receivable to factors at a 5 percent discount. The firm’s average collection period is 90 days.
a. What is the dollar cost of the factoring service?
b. What is the simple annual interest cost of the loan?
c. What is the effective annual interest cost of the loan?
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
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Related Book For 
Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
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