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question (a) – calculate the cost and benefit under each option 1 & 2
DOUBT – in option 2 while calculating the increase in finance cost how did we get the figure 2310370 . the sales are 28m so should the increase in finance cost be
(28000000*0.8*(0.09-0.07))=448000 ?The workings are shown in option 1 – the revised average receivables under both options are 30/365 x $28m.
sir whenever the factor advances us certain percentage of sales do we always calculate the interest on such advances using receivable figures? not sales figures?
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