A Firm Has an Average Collection Period of 37 Days

question 112

Multiple Choice

A firm has an average collection period of 37 days and factors all of its receivables immediately at a discount of .98 percent.Assume all accounts are collected in full.What is the firm's effective cost of borrowing?

• A)9.98 percent
• B)10.13 percent
• C)10.24 percent
• D)10.38 percent
• E)10.20 percent

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