Poutine Cheez Company Has Yearly Sales of $550,000 and an Average

question 76

Essay

Poutine Cheez Company has yearly sales of $550,000 and an average collection period of 35 days.A factoring company is offering a 35-day receivables loan equal to 85% of the accounts receivable at 9% along with a commission fee of .45% of the receivables.The firm estimates that by taking the offer, it could save $300 in collection costs and a full half of one percent in bad debt costs, as a percentage of sales.What is the annual cost (in percent)of the arrangement to Poutine Cheez?

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Definitions:

Action Stage

A phase in the Transtheoretical Model of Behavior Change where individuals actively implement behavior changes towards a goal.

Health Action Process Approach Model

A psychological theory that describes the process of how individuals intend to achieve and maintain health-related behaviors.

Transition

The process or a period of changing from one state or condition to another in any aspect of life or environment.

Preparation Stage

A phase in the Transtheoretical Model of change where individuals intend to take action to address a behavior or problem within the near future.