(Answered) Question whatchamacallit sports b whatchamacallit could

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Question: Whatchamacallit Sports (B). Whatchamacallit could also buy export credit insurance from FCIA for a 1.5% premium. It finances the $100,000 receivable from Phang from its credit line at 6% per annum interest. No compensating bank balance would be required.

a. What is Whatchamacallit's annualized percentage all-in cost of financing?

b. What are Phang's costs?

c. What are the advantages and disadvantages of this alternative compared to the banker's acceptance financing in Whatchamacallit (A)? Which option would you recommend?

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