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:

Factor Analysis

A statistical method used to describe variability among observed, correlated variables in terms of a potentially lower number of unobserved variables, called factors.

Statistical Analysis

The process of collecting, reviewing, interpreting, and presenting data to discover underlying patterns and trends.

Mental Elements

Fundamental components or aspects of the mind that contribute to thought and consciousness.

Complexes

Psychological concepts referring to a core pattern of emotions, memories, perceptions, and wishes in the personal unconscious organized around a common theme.