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Assume that the operation of your business resulted in sales of $730,000 last year. Year-end receivables are $100,000. You are considering factoring the receivables to raise cash to help finance your venture s growth. The factor imposes a 7 percent discount and charges an additional 1 percent for each expected ten-day average collection period over thirty days. If the $730,000 in sales last year were evenly distributed throughout the year, an average of $100,000 in receivables outstanding would imply what average collection period? Given the original terms stated in the problem, what dollar amount would you expect to receive for your receivables?

Assume that the operation of your business resulted in sales of $730,000 last year. Year-end receivables are $100,000. You are considering factoring the receivables to raise cash to help finance your venture s growth. The factor imposes a 7 percent discount and charges an additional 1 percent for each expected ten-day average collection period over thirty days. If the $730,000 in sales last year were evenly distributed throughout the year, an average of $100,000 in receivables outstanding would imply what average collection period? Given the original terms stated in the problem, what dollar amount would you expect to receive for your receivables?

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter22: Providing And Obtaining Credit
Section: Chapter Questions
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Assume that the operation of your business resulted in sales of $730,000 last year. Year-end receivables are $100,000. You are considering factoring the receivables to raise cash to help finance your venture s growth. The factor imposes a 7 percent discount and charges an additional 1 percent for each expected ten-day average collection period over thirty days. If the $730,000 in sales last year were evenly distributed throughout the year, an average of $100,000 in receivables outstanding would imply what average collection period? Given the original terms stated in the problem, what dollar amount would you expect to receive for your receivables?
Transcribed Image Text:Assume that the operation of your business resulted in sales of $730,000 last year. Year-end receivables are $100,000. You are considering factoring the receivables to raise cash to help finance your venture s growth. The factor imposes a 7 percent discount and charges an additional 1 percent for each expected ten-day average collection period over thirty days. If the $730,000 in sales last year were evenly distributed throughout the year, an average of $100,000 in receivables outstanding would imply what average collection period? Given the original terms stated in the problem, what dollar amount would you expect to receive for your receivables?
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