Marci's has an average collection period of 34 days. Current practice is to factor all receivables immediately at a discount rate of 1.8 percent. Assume that default is extremely unlikely. What is the effective cost of borrowing?
A) 18.79 percent
B) 16.20 percent
C) 17.78 percent
D) 20.97 percent
E) 21.53 percent
Correct Answer:
Verified
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