Question No 52 BPP revision kit

Hi John,

I know youre a bit busy due the PQ awards,hope you had a good time.

i’m posting this for thursday when you’ll be free.

This is the answer of the question.

$28,500
The cost is (total sales × 1.5%) + $6,000 = ($1.5m × 1.5%) + $6,000 = $28,500
Non recourse means that the factor carries the risk of the bad debts.

My concern is as it was without recourse which means the factor will take on the risk of bad debts so the 2% saving on bad debts (2% x 1.5 million=30000) should be netted of against the cost of 28500 , which would lead to a saving of 1500?

Best Regards,
Furqan