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Essay / Research Paper Abstract
This 3 page paper answers two questions set by the student. The first looks at the way equivalent interest rates from factoring fees. The second part of the paper looks at how interest rates can be calculation a loan where it is paid off after 12 months and compares the rate when it is paid off after 1 one month.
Page Count:
3 pages (~225 words per page)
File: TS14_TEintcase.rtf
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Unformatted sample text from the term paper:
a reserve that is held back against any unpaid accounts receivable. However this is not a part of the fee and the money will be passed on as long as
the accounts receivables are paid. The fee in this case is 1.5%, so for every 100 that the factoring firm collects they
will pass on 98.50. This is a simple calculation, where there is a fee of 1.5 on an amount of 100 the equivalent interest rate is 1.5%.
An alterative that may be acceptable is to look at this in terms of the amount that is being received, which is 98.5, and then
calculate 1.5 as a percentage of the amount received, in which case it would be 1.52%. However, the question is phrased to look a the interest that is payable on
the invoices, and not the amount received, so this is 1.5% in this case. It may be tempting argue that his is an
amount for a month, and as such it should be multiplied out to get an equivalent annual rate, but the fee is the same regardless of the time, it does
not increase and only paid the once, do the fee is 1.5% and the equivalent interest rate is 1.5%. The agreement is
for the payment after a month, if this is increased to 1.5 months it will not make any difference, whether the amount is looked at monthly six weekly or even
years the amount of the fee will equate to 1.5% of the total value, and as such is equivalent to 1.5% interest rate. This means that the period over which
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