Ignoring Defaults, What Is the Approximate Effective Cost of Factoring

question 8

Multiple Choice

Ignoring defaults, what is the approximate effective cost of factoring if receivables are sold at a 4% discount and the average collection period is 2 months?

• A) 19.40%
• B) 24.00%
• C) 26.53%
• D)27.75%

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