A firm sells its accounts receivables to a factor at a 1.5% discount. The average collection period
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A firm sells its accounts receivables to a factor at a 1.5% discount. The average collection period is 1 month. What is the implicit effective annual interest rate on the factoring arrangement? Suppose the month average collection period is 1.5 months. How does this affect the average implicit effective annual interest rate?
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Discount to factor! Average collection Average collection 1.50% 1.00 month 1.50 month
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Given Data Discount to factor 150 Average collection period i 100 month ...View the full answer
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0078034640
7th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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