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Author Question: Bonneau Sunglass Co. is considering the factoring of its receivables. The firm has credit sales of ... (Read 478 times)

sheilaspns

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on: May 1, 2019
Bonneau Sunglass Co. is considering the factoring of its receivables. The firm has credit sales of $500,000 per month and has an average receivables balance of $1,000,000 with 60-day credit terms. The factor has offered to extend credit equal to 85% of the receivables factored less interest on the loan at a rate of 2% per month. The 15% difference in the advance and face value of all receivables factored consists of a 2% factoring fee plus a 13% reserve, which the factor maintains. In addition, if Bonneau decides to factor its receivables, it will sell them all, so that it can reduce its credit costs by $2,000 a month.

a.What is the cost of borrowing the maximum amount of credit available to Bonneau through the
factoring agreement?

b.What considerations other than cost should be accounted for by Bonneau in determining
whether or not to enter the factoring agreement?
Foundations of Finance ¦ Keown, Petty, Martin ¦ 9th Edition
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Marked as best answer by sheilaspns on May 1, 2019

onowka

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Reply #1 on: May 1, 2019
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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sheilaspns

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Reply 2 on: May 1, 2019
YES! Correct, THANKS for helping me on my review

robbielu01

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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