Mistake made in this factoring problem,help me solve it ??

Hello Friends,

Doubt is on factoring problem No. 15 from CA final SFM Nov 2015 RTP.

The way I have solved is as follows:.

a	annual sales ( given )	60,000,000
b	annual commission	1,200,000
c	reserves	5,880,000
	(a-b)*10/100
d	interest @ 16%	8,467,200
	(a-b-c)*16/100
e	savings in bad debts	840,000
	(600000001.75/10080/100)
f	savings in admin cost	600,000
g	net cost of factoring	8,227,200
	(b+d-e-f)
h	net amount received (a-b-c-d)	44,452,800
i	annual cost (g/h)	18.51% p.a

Whereas RTP answered 14.77% p.a as annual cost.

Please point out the mistake I have commited in this problem, what is the logic behind the interest computed by RTP and why my interest is varying.??

Kindly reply me in lehmans language, with simple explanation.

correct withholding amount is 10% of gross sales and not net of commission.

there is 90 days credit period hence interest will accrue only for 90 days equivalent outstanding and since it is average outstanding same amount will remain as advance with the company.

cost% will be calculated on amount actually received and not on gross, because amount you advanced is for 90 days, and receivable are realised after 90 days so amt pending in cycle is amt for 90 days less 10% withholding for 90 days sales less commission for the 90 days sales.

Turnover	a	60,000,000
Withhold	b	6,000,000
Commission	c	1,200,000
Interest	e (a-b-c)*16% for 90 days	2,112,000

Saving		600,000
Bad debt		840,000
		1,440,000

Net cost		1,872,000

Proceeds received	(a-b-c-d)*90/360	12,672,000
		14.77%