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To: rudedog who wrote (85094)	12/13/1998 3:20:00 PM
From: Chuzzlewit	Respond to of 176387

Rudy, when I used 5% I was just pulling a figure out of the air, so I'm not trying to stand by it. It's been some time since I dealt with factors. Back then they used to discount at around 15%. Just consider how much this is costing Compaq! Based on the way banks calculate interest 6% works out to 72% per annum, but if you compound continuously it comes out to over 107% per annum. In actuality, the rates are much higher because this is a discount like t-bills. So, a 6% rate is actually 6.38%, or 76.6% per annum, and on a continuous compounding basis, it is about 117% per annum. I do believe that this is directly related to the consumer sector, because one of the major draws in getting retailers to carry your merchandise is to give them good "dating". The problem is that a retailer without merchandise doesn't sell, but retailers need an incentive to stock items. Thus, the manufacturer in essence leases shelf-space from the retailer by granting generous terms. This problem doesn't exist with sales to major corporations or medium-sized businesses. TTFN, CTC