The owner of a company is debating between factoring the

Reference no: EM13619684

The owner of a company is debating between factoring the accounts receivables of the company and investing the proceeds to invest in the stock market, or continue receiving the AR payments. If he factors the AR, the company can receive $69,438, current liablilities of the company are 32,850, assume he can get a return of 18% a year for 3 years.If he continues receiving payments he will receive the following cashflows year 1= 41,060, year 2 =29225, year 3= 13980. Assume operating costs are already deducted from the cashflows, current liabilities plus interest for 3 years would be 36482. Use NPV and IRR to evaluate what is the best option.

Should he continue receiving payments for three years or sell the AR and invest in the stock market for the next three years?

Reference no: EM13619684

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