Your Firm Has an Average Collection Period of 51 Days

question 96

Multiple Choice

Your firm has an average collection period of 51 days. Current practice is to factor all receivables immediately at a 2.2 percent discount. What is the effective cost of borrowing in this case? Assume that default is extremely unlikely.

• A) 17.12 percent
• B) 17.18 percent
• C) 17.26 percent
• D) 17.53 percent
• E) 17.59 percent

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Definitions:

Increasing Output

A process aimed at raising the amount of goods or services produced, often through efficiency improvements or resource optimization.

Job Extension

Involves broadening the range of tasks assigned to a job to increase the variety and interest of the work.

Employee Satisfaction

Employee Satisfaction refers to the level of contentment employees feel about their job and work environment, impacting motivation and retention.

Support Staff

Employees who provide administrative or other support services, helping to maintain and enhance the operations of an organization.