Factoring: a Company Sells $125,000 of Its Accounts Receivable to Factors

question 41

Multiple Choice

Factoring: A company sells $125,000 of its accounts receivable to factors at 3 per cent discount. The company's average collection period is one month. What is the dollar cost of the factoring service?

• A) $3,000
• B) $4,500
• C) $3,750
• D) $4,250

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Definitions:

Proximity

The state or quality of being near or close in space or time.

Centre-of-Gravity

A method used in logistics and supply chain management to determine the best location for facilities based on minimizing transportation costs, considering the locations of suppliers, customers, and other factors influencing the total cost.

Quantitative Methods

A systematic empirical investigation of observable phenomena via statistical, mathematical, or computational techniques.

Labour Productivity

A measure of economic performance that indicates the amount of goods and services produced by one hour of labor.