Try reading the technical article that was written by the examiner ( Antony Head) it’s called – The Capital Asset Pricing Model – Part 2
Project-Specific Discount Rates. He explains it very well and it’s always best to understand it in his point if view.
if i’m reading the question carefully, i believe that the 12% interest taken into cansideration on calculating the cost of financing of the receivables will be the overdraft amount that was stated in the question.
“special gifts Sppliers cost of overdraft finance is 12% pa.
Hope this helps.