H&H Companies Has an Average Collection Period of 43 Days

question 34

Multiple Choice

H&H Companies has an average collection period of 43 days and factors all of its receivables immediately at a discount of 1.1 percent.Assume all accounts are collected in full.What is the firm's effective cost of borrowing?

• A)9.68 percent
• B)9.73 percent
• C)9.97 percent
• D)9.84 percent
• E)10.07 percent

---

Definitions:

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the percentage of tax applied to your income for each tax bracket in which you qualify.

Average Tax Rate

The proportion of total income paid in taxes, calculated by dividing total tax amount by total income.

Circular 230

Regulations and guidelines issued by the US Department of the Treasury for tax professionals regarding practice before the IRS.

Certified Public Accountants

Licensed accounting professionals who have passed the CPA examination and met state certification and experience requirements, skilled in areas such as audit, tax, and financial consulting.