Your Firm Factors Its Accounts Receivable Immediately at a 3

question 206

Multiple Choice

Your firm factors its accounts receivable immediately at a 3% discount. The average collection period is 41.95 days. Assume that all accounts are collected in full. What is the effective annual interest rate on this arrangement?

• A) 29.9%
• B) 30.3%
• C) 30.7%
• D) 30.9%
• E) 31.3%

---

Definitions:

Reselling the Defective Fixtures

The act of selling goods that have flaws or defects not corrected by the seller, often at a reduced price.

Seller/Lessor in Breach

Refers to a situation where the seller or lessor fails to fulfill their contractual obligations, giving the buyer or lessee potential remedies under the law.

Deduction in Damages

A concept in legal disputes where the amount of compensation awarded is reduced due to certain factors, such as contributory negligence or mitigation of loss.

Delivery Expenses

Costs associated with the process of transporting goods from the seller to the purchaser.