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bpp textbook section c question 2 H finance,why the cost of finance is 4442?
I do not have the BPP Study Text – only the Revision Kit, and so I am unable to help you.
(1) Cost of finance
The cost of the finance provided by the factor is 5% of sales, since 80% of sale and then a further 15% is remitted by the factor. If sales are 10% lower due to the aggressive collection
procedures, then this is (0.05 * 98,714 * 0.9) = 4,442.remitted by the factor means paid in advance to the company.
Sorry to our teacher John Moffat to answer the question, I looked at the answer and I understood the arithmetics and the concept behind. the 80% and 15% advance payment are not relevant to the cost of finance.
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