\The Delta Fish Hatchery factors its accounts receivables immediately at a discount rate of 1.2 percent. The average collection period is 36 days. Assume all accounts are collected in full. What is the effective annual interest rate on this arrangement?

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The effective annual interest rate is 13.02 percent. This is because the discount rate of 1.2 percent is applied to the accounts receivable immediately, so the effective annual interest rate is 1.2 percent multiplied by 365 days per year, divided by 36 days, which equals 13.02 percent.

\The Delta Fish Hatchery Factors Its Accounts Receivables Immediately at a Discount