What is the disbursable amount to the firm by the factor

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Reference no: EM132832867

Moksha International has a total sale of Rs.100 lacs, of which 75% is on credit. The average collection period is 80 days. The past experience indicates that bad debt losses are around 1.5% of the credit sales. The firm spends about Rs.1,50,000 per annum to administer its credit sales. These are avoidable as a pay advance against receivables to the firm at an interest rate of 18% after withholding 10% as reserve. (Assume 360 day year)

Problem 1: What is the total credit Sales of Moksha International?

a) Rs. 80 lacs
b) Rs. 75 lacs
c) Rs. 70 lacs
d) Rs. 65 lacs

Problem 2: What are the Average Receivables?

a) Rs. 80,00,000
b) Rs. 22,22.222
c) Rs. 16,66,667
d) Rs. 13,89,990

Problem 3: What is the disbursable amount to the firm by the factor?

a) Rs. 16,66,667
b) Rs. 14,58,333
c) Rs. 16,58,999
d) Rs. 18,92,992

Problem 4: What is the Total Interest Chargeable by the factor?

a) Rs. 58,333
b) Rs. 41,667
c) Rs. 1,66,667
d) Rs. 83,192

Problem 5: What is the Effective Cost of Factoring?

a) 4.23%
b) 3.51%
c) 6.54%
d) 2.86%

Reference no: EM132832867

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