bpp

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.

Thank you for answering :-)