A Firm Sells Its $1,000,000 Receivables to a Factor for $960,000.Average

question 23

Multiple Choice

A firm sells its $1,000,000 receivables to a factor for $960,000.Average collection period is one month.The effective annual rate is:

• A)27.43%
• B)48.00%
• C)60.10%
• D)63.21% Factor discount =

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Definitions:

Core Purpose

The fundamental reason for an organization's existence, beyond just making money.

Corporate-Level Strategy

Involves decision-making at the highest level of a company, focusing on the overall scope and direction of the organization.

Strategic Planning

The process of defining a business's strategy, directions, and making decisions on allocating its resources to pursue this strategy.

SBUs

Strategic Business Units are individual units within a larger company, focusing on specific markets or products and having their own mission, objectives, and competitors.