QT Stores Has an Average Collection Period of 28 Days

question 56

Multiple Choice

QT Stores has an average collection period of 28 days and factors all of its receivables immediately at a discount of 1.12 percent.What is the firm's effective cost of borrowing assuming all accounts are collected in full?

• A)16.28 percent
• B)15.81 percent
• C)15.57 percent
• D)16.33 percent
• E)15.88 percent

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Definitions:

Cognitive-Type

Cognitive-Type refers to classifications or categories based on cognitive processes such as perception, thinking, and understanding.

Intuitive-Type

A person who relies more on intuition and subjective impressions than on rational analysis and objective evidence.

Reason

The power of the mind to think, understand, and form judgments by a process of logic.

Dogmatism

The tendency to lay down principles as incontrovertibly true, without consideration of evidence or the opinions of others.