Which is the best option and why for blazer company

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Blazer Company will have a cash shortfall of $250,000 for about two months in the middle of the year. The options available to Blazer are:

a. Borrow the entire $250,000 from its bank. The bank will charge Blazer the current prime rate plus 1%.

b. Blazer typically has at any time $400,000 or more in accounts receivable. The accounts receivable finance company will loan Blazer up to 70% of its accounts receivable and will charge 8% interest.

c. Blazer can factor its accounts receivable to a factoring company. The factoring company will charge Blazer $4,000 for every 30 days that it has to factor a block of $250,000.

Problem 1: Which is the best option and why?

Reference no: EM132758243

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