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In Example 2 of Chapter 5 of the lecture notes, why do we calculate Interest saved as at the same rate as the overdraft interest?
We calculate the interest saved at the same rate as the overdraft interest because it allows for a direct comparison between the cost of borrowing through the overdraft and the savings achieved by reducing the overdraft through advances received from the factor. When advances are received, the company saves overdraft interest, which is typically at a higher rate.
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