Assume the following facts about a firm that borrows by pledging its receivables: $\begin{array}{ll}\text { Average balance of accounts receivable }&\$60,000\
\text { Annual receivables turnover ( } 360 / \mathrm{ACP}) & 6 \mathrm{x} \
\text { Administrative fee charged on all new receivabless } & 1.5 \% \
\text { Interest rate on outstandingloans } & 11.5 \% \
\text { Percent of receivables accepted } & 75 \%
\end{array}$ What is the effective cost of financing stated as an annual rate?
A) 23.5%
B) 13%
C) 13.5%
D) 16.83%

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The Answer of Assume the following facts about a firm that borrows by pledging its receivables: $\begin{array}{ll}\text { Average balance of accounts receivable }&\$60,000\
\text { Annual receivables turnover ( } 360 / \mathrm{ACP}) & 6 \mathrm{x} \
\text { Administrative fee charged on all new receivabless } & 1.5 \% \
\text { Interest rate on outstandingloans } & 11.5 \% \
\text { Percent of receivables accepted } & 75 \%
\end{array}$ What is the effective cost of financing stated as an annual rate?
A) 23.5%
B) 13%
C) 13.5%
D) 16.83%

Assume the Following Facts About a Firm That Borrows by Pledging