Title FM Answer (4)-combined (1).pdf ✅

Dheera Test Series Powered by DHEERA Test Series [2] Visit us: www.dheeratests.com Statement Showing Evaluation of Factoring Proposal ₹ A. Annual Cost of Factoring to the Company: Factoring commission ( ₹ 71,111 ́ 360/80) 3,20,000 Interest charges ( ₹ 1,25,156 ́ 360/80) 5,63,200 Total 8,83,200 B. Company’s Savings on taking Factoring Service: ₹ Cost of credit administration saved 2,40,000 Bad Debts ( ₹ 160,00,000 x 1/100) avoided 1,60,000 Total 4,00,000 C. Net Cost to the company (A – B) ( ₹ 8,83,200 – ₹4,00,000) 4,83,200 Effective cost of factoring = 4,83,200 30,03,733 × 100 = 16. 09%