Ignoring Defaults, What Is the Approximate Effective Cost of Factoring

question 83

Multiple Choice

Ignoring defaults, what is the approximate effective cost of factoring if receivables are sold at a 2% discount and the average collection period is 1 month?

• A) 19.40%
• B) 24.00%
• C) 26.53%
• D)27.43%

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Definitions:

Tactical Budgets

Budgets focused on supporting short-term strategies or campaigns within a business.

Strategy Profile

A description of the methodologies and approaches a company employs to achieve its strategic goals.

Buy Centers

Groups of individuals within an organization who are responsible for making purchase decisions, typically involving multiple stakeholders.

Market Penetration

The strategy of increasing sales of existing products to existing market segments without changing the product.