Fred's Factory Has Credit Sales of $747,500 and an Average

question 387

Multiple Choice

Fred's Factory has credit sales of $747,500 and an average accounts receivable balance of $57,500. Fred factors his receivables throughout the year with his local bank at a 2% discount. What
Is the effective annual rate of this arrangement?

• A) 27.88%
• B) 28.03%
• C) 28.67%
• D) 29.24%
• E) 30.04%

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Definitions:

Role-playing

A method or technique used in training and therapy that involves acting out roles or situations to practice skills, understand a perspective, or predict the outcome of an interaction.

Reinforcement

A process in behavior analysis that increases the likelihood of a behavior being repeated by applying a rewarding stimulus or removing a negative one.

Cognitive-behavioral Theorists

Psychologists who emphasize the role of thought patterns and beliefs in influencing behavior and emotions, often proposing therapy approaches to modify these.

Social Anxiety Disorder

A chronic mental health condition in which social interactions cause irrational anxiety and fear.