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MiraWest Enterprises (B). MiraWest Enterprises has sold a combination of fims and DVDs to Hong Kong Media Incorporated for USS103,000, with payment due in five months. MiraWest has the following alternatives for financing this receivable: (1) use its bank credit line. Interest would be at the prime rate of 4.6% plus 150 basis points per annum; or (2) Use its bank credit line but purchase export credit insurance for a 1\% fee. Because of the reduced risk, the bank interest rate would be reduced to 4.6\% per annum without any points. In both cases MiraWest would need to maintain a compensating balance of 18% of the loan's face amount, and no interest will be paid on the compensating balance by the bank. 3) MiraWest Enterprises has been approached by a factor that offers to purchase the Hong Kong Media Imports recelvable at a 15.5% per annum discount plus a 2.1% charge for a non-recourse clause a. What are the annualized percentage ali-in costs of each alternative? b. What are the advantages and disadvantages of the factoring altemative compared to the altematives 1 and 2 ? (NOTE: Assume a 360-day year.) a. What are the annualized percentage all-in costs of each alternative? Alemative 1: Bank Credit Lino The bank interest expense on receivable is $ (Round to the nearest cent.)

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