What is the annual all-in cost of this factoring financing

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You plan to sell a $1 million receivable to a finance company. The receivable is due in six months. This finance company charges a handling fee of 4% on the face value for purchasing the receivable on a non-recourse basis and a factoring fee of 1% for every month the receivable is outstanding. Fees are paid at the time when receivable is sold. What is the annual all-in cost of this factoring financing? Any advantages of using factors?

Reference no: EM132267373

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