A Firm Sells Its Accounts Receivable to a Factor at a 5

question 23

Multiple Choice

A firm sells its accounts receivable to a factor at a 5% discount.If the average collection period is 1 month, determine the effective annual rate of interest on the factoring.

• A)90.06%
• B)85.06%
• C)80.06%
• D)75.06%

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Definitions:

Block Letter Style

A style of writing or printing in which each letter stands alone without being connected to another, typically used for clarity and readability in formal documents.

Simplified Letter Style

A format for writing letters that is clear, straightforward, and devoid of unnecessary embellishments or complex formatting.

Professional Correspondence

The exchange of letters or emails in a formal context, often related to business or official matters.

Open Punctuation

A style in written communication where traditional punctuation marks like commas or periods are omitted in specific instances, such as within addresses or salutations in letters.