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:

Standard Sensor

A predefined device used to detect or measure physical properties.

Special Sensor

A device designed to detect, measure, and respond to specific inputs from the physical environment, such as light, heat, motion, moisture, pressure, or any one of a great number of other environmental phenomena.

Transfer Price

The cost incurred for products or services exchanged between the divisions or departments within the same organization.

Minimal Acceptable

The lowest level or standard considered satisfactory or acceptable for a specific purpose or requirement.