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%

---

Definitions:

ERG Theory

A theory of human motivation that categorizes needs into existence, relatedness, and growth, proposing that these needs can be pursued simultaneously.

Performance Ratings

Evaluations or assessments of an employee's job performance over a specific period.

Impressive Titles

Titles or designations given to jobs, roles, or positions that are designed to evoke respect, admiration, or a high status.

Promotions

Activities, including marketing and advertising, aimed at increasing awareness, sales, or visibility of a product, service, or brand.