Sheridan, Inc., sells $302,000 of its accounts receivable to factors at a 3 percent discount. The firms
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Question:
Sheridan, Inc., sells $302,000 of its accounts receivable to factors at a 3 percent discount. The firm’s average collection period is 90 days.
What is the dollar cost of the factoring service? (Round answers to the nearest whole dollar, e.g. 5,275.)
Dollar-cost of factoring |
per month
Dollar-cost over 90 days |
What is the simple annual interest cost of the loan? (Do not round intermediate calculations. Round answer to 1 decimal place, e.g. 15.1%.)
What is the effective annual interest cost of the loan? (Round answer to 2 decimal places, e.g. 15.25%.)
Related Book For
Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
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