A Firm Sells Its Accounts Receivable to a Factor at a 2

question 21

Multiple Choice

A firm sells its accounts receivable to a factor at a 2% discount.If the average collection period is 1 month, determine the effective annual rate of interest on the factoring.

• A)27.43%
• B)28.53%
• C)29.63%
• D)30.73%

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Definitions:

Obsessed

A state of being excessively preoccupied with someone or something, leading to compulsive behavior or thoughts.

Behind Bars

A phrase meaning to be imprisoned or incarcerated.

Mild Sanctions

Penalties or measures that are not severe or harsh, intended to enforce compliance with laws or regulations without causing significant harm or distress.

Ostracism

The deliberate exclusion of an individual or group from social interaction, communication, or involvement in a community.