Kacie's Has an Average Collection Period of 23 Days and Factors

question 21

Multiple Choice

Kacie's has an average collection period of 23 days and factors all receivables immediately at a discount of .95percent.What is the effective cost of borrowing? Assume that default is extremely unlikely.

• A)16.32 percent
• B)16.28 percent
• C)16.36 percent
• D)16.52 percent
• E)16.49 percent

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Definitions:

Manufacturing Environment

The setting or conditions in which the production of goods is carried out, often involving factories, machinery, and labor.

High-Pressure Steam Engine

An advancement in steam engine technology that allowed engines to operate at higher pressures, significantly improving efficiency and power output, crucial to the Industrial Revolution.

Second Bank

The Second Bank of the United States, established in 1816 and operational until 1836, was a central bank chartered by the U.S. government to manage the country's finances.

U.S.

A country in North America, officially known as the United States of America, characterized by a federal republic governance structure and a diverse population.