Your firm has an average collection period of 42 days.Current practice is to factor all receivables immediately at a 4 percent discount.Assume that default is extremely unlikely.What is the effective cost of borrowing?
A) 28.79 percent
B) 36.20 percent
C) 37.78 percent
D) 40.97 percent
E) 42.58 percent
Correct Answer:
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