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i do a different calculation to the answer but come up with figures different by $3.
I calculate their current cost and if there is an admin saving `i add it to current cost, i then do two calculations and to get the difference deduct. If the factor is offering 80% advance of new receivable at 2% more than bank, am i to assume the other 20% is still being financed by overdraft
ACCA trying to trip us up i think
If there is an admin saving, then I do not know why you want to add it to the current cost – it will reduce the current cost.
If the factor is giving 80% in advance, then yes – always the other 20% will be still financed by overdraft.
Have you watched my free lectures on the management of receivables?