Your firm has an average collection period of 43 days. Current practice is to factor all receivables

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Your firm has an average collection period of 43 days. Current practice is to factor all receivables immediately at a 2 percent discount. What is the effective cost of borrowing in this case? Assume that default is extremely unlikely.

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Essentials of Corporate Finance

ISBN: 978-1260013955

10th edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

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Question Posted: Nov 28, 2019 05:01 AM

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Your firm has an average collection period of 43 days. Current practice is to factor all receivables

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If we factor immediately we receive cash on an average ...View the full answer

Essentials of Corporate Finance

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