A Firm Has an Average Collection Period of 35 Days

question 28

Multiple Choice

A firm has an average collection period of 35 days and factors all of its receivables immediately at a 0.95 percent discount.Assume all accounts are collected in full.What is the firm's effective cost of borrowing?

• A)9.98 percent
• B)10.13 percent
• C)10.24 percent
• D)10.38 percent
• E)10.47 percent