Smooth Yogurt, Inc

question 66

Multiple Choice

Smooth Yogurt, Inc. has average receivables of $80,000, which turn over once every 60 days.  It pledges all of its receivables to a bank that advances 80% of the total at 4% over prime and charges a 2% administrative fee on the total amount pledged.  If prime is 10.5%, what effective interest rate is Smooth paying for its receivables financing?

• A)6.0%
• B)14.5%
• C)15.0%
• D)29.5%

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Definitions:

Type II Error

The error that occurs when a false null hypothesis is not rejected; failing to detect an effect that is present.

Type II Error

A statistical error that occurs when a test fails to reject a false null hypothesis, also known as a false negative.

Effect Size

A quantitative measure of the strength of a phenomenon or the magnitude of a difference between groups in a statistical analysis.

Significance Level

A threshold used in hypothesis testing that determines the probability of rejecting a null hypothesis when it is actually true.