Upstate Farms Factors Its Accounts Receivable Immediately at a Discount

question 16

Multiple Choice

Upstate Farms factors its accounts receivable immediately at a discount of 2.5 percent.The average collection period is 39 days.Assume all accounts are collected in full.What is the effective annual interest rate on this arrangement? Assume a 365-day year.

• A)29.97%
• B)26.74 %
• C)30.78%
• D)27.90%
• E)28.33%

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