Upstate Farms Factors Its Accounts Receivable Immediately at a 3

question 68

Multiple Choice

Upstate Farms factors its accounts receivable immediately at a 3 percent discount.The average collection period is 42 days.Assume all accounts are collected in full.What is the effective annual interest rate on this arrangement?

• A)29.97%
• B)30.30%
• C)30.78%
• D)30.90%
• E)31.33%

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Definitions:

Contiguity

A Gestalt principle of perception; the tendency to perceive two things that happen close together in time as being related.

Continuity

A Gestalt principle of perception; the tendency to perceive things as simply as possible with a continuous pattern rather than with a complex, broken-up pattern.

Depth Perception

The visual ability to perceive the world in three dimensions, enabling the estimation of distances.

Contiguity

The state of being close together in time or space, often used in psychology to describe how stimuli or events are associated through their proximity.