Homework Answers
Dollar cost of factoring per month = Accounts receivables sold x Factor discount
= $150,000 x 2.875%
= $4,312.50
Simple monthly interest cost of factoring = 2.875/ (100 - 2.875)
= 0.0296
Therefore, simple annual interest cost of the factors loan = 0.0296 x 12
= 35.5%
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