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A Firm Sells Its Accounts Receivable to a Factor at a 2

Question 21

Multiple Choice

A firm sells its accounts receivable to a factor at a 2% discount.If the average collection period is 1 month, determine the effective annual rate of interest on the factoring.


A) 27.43%
B) 28.53%
C) 29.63%
D) 30.73%

Correct Answer:

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