What is the annual cost of financing

Assignment Help Accounting Basics
Reference no: EM133132044

Question - Bulldogs Inc. enters into an agreement with a firm that will factor the company's accounts receivable. The factor agrees to buy the company's receivables, which average P100,000 per month and have an average collection period of 30 days. The factor will advance up to 80% of the face value of receivables at an annual rate of 10% and a charge fee of 2% on all receivables purchased. The controller of the company estimates that the company would save P18,000 in collection expenses over the year. Fees and interest are not deducted in advance. Assuming a 360-day year, what is the annual cost of financing?

Reference no: EM133132044

Questions Cloud

What does the hand rule imply : (a) Suppose there is an accident, and it turns out that w
Human capital theory of education or signalling theory : Which do you find more compelling, the Human Capital theory of education or Signalling Theory. Why or why not?
What is the difference in the projected roes : Under a relaxed policy, current assets will be 20% of sales. What is the difference in the projected ROEs between the restricted and relaxed policies
Explain impact current account : The trend in recent times is that countries want their currencies to be weak because it makes their exports cheaper on the global market.
What is the annual cost of financing : Bulldogs Inc. enters into an agreement with a firm that will factor the company's accounts receivable. What is the annual cost of financing
Explain the free international trade : Use a figure to show whether free international trade improves the standard of living in China and the United States as a whole, or not.
How much would you have in five years : If you deposit PhP45,000 into an account earning 4% interest compounded quarterly, how much would you have in 5 years
Describe equilibrium price and quantity in a market : Describe equilibrium price and quantity in a market. Explain investment decisions with an emphasis on profitability.
Discuss the role health insurance has played : Discuss the role health insurance has played in insulating Americans from the escalating costs of health care. In what way(s) is this both good and bad for pati

Reviews

Write a Review

Accounting Basics Questions & Answers

  Evaluate lehmans itoshi''s and tohokus yield

Evaluate Lehman's, Itoshi's and Tohoku's yield-to-maturity. Which bond(s) is/are traded at premium/discount/par value? Proof your answers with calculations

  What is the after-tax cost of debt

The issue price will be $1,000. The tax rate is 25%. If the flotation cost is 2% of the issue proceeds, then what is the after-tax cost of debt

  Calculate the number and cost of goods available for sale

Brown Company sold and delivered 58 units on June 30. Calculate the number and cost of goods available for sale

  What do some companies do to compensate

Anglo Corporation has a current ratio of 1.1. Jon has always been told that a corporation's current ratio should exceed 2.0.

  Which of the factors would not be directly relevant

Which of the following factors would not be directly relevant in negotiating a profit and loss sharing agreement for a partnership?

  What is the first-year depreciation for straight-line

Assume 1,200 hours were used the first year and 2,250, the second year. What is the first-year depreciation for straight-line (SL)

  What is the cost of the raw materials requisitioned in june

Jobs 102 and 103 are finished in June, and Job 104 is expected to be finished in July. What is the cost of the raw materials requisitioned in June

  Statement of mining exploration expenditures

In 2009, Ray incurs $60,000 of mining exploration expenditures, and deducts the entire amount for regular income tax purposes. Which of the following statements is incorrect?

  Determine the maximum capital cost allowance deduction

Determine the maximum capital cost allowance (CCA) deduction for GPS for the year. Show opening and ending UCC

  Discuss differences between the indirect and direct methods

Discuss the differences between the indirect and direct methods of preparing the statement of cash flows. What do you believe are the most significant advantages and disadvantages of using each method? Explain your reasoning.

  Compute the total asset turnover for the year ended

Compute its total asset turnover for the year ended September 28, 2013, and the year ended September 29, 2012. Assume total assets at September 24, 2011

  What is the break-even point expressed in total revenue

Southwest Hospital has fixed costs of $100 million per year. What is the break-even point expressed in total revenue

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd