Ignoring Defaults, What Is the Approximate Effective Cost of Factoring

question 34

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)27.40% $(100-98)/$98 = 2.04% per two-month period

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Definitions:

Matched Pairs

A research design in which subjects are paired based on shared characteristics or behaviors, ensuring that each pair is as similar as possible except for the variable under investigation.

Rank Orders

This term describes a method of organizing data where items are arranged based on their order or rank, often without considering the actual distance or difference between the rankings.

Variable of Interest

The specific element, factor, or measure that a researcher seeks to investigate or analyze in a study.

Matched Pairs Design

A research methodology where participants are paired based on certain criteria, ensuring each pair is as identical as possible, and each member is then allocated to different experimental conditions.