General Accounting Assume that your business resulted in $900,000 in sales last year. Year-endreceivables are $120,000. You are considering factoring the receivables to raisecash to help finance growth. The factor imposes a 6% discount and charges anadditional 1% for each expected 10-day average collection period over 30 days.If the $900,000 in sales last year were evenly distributed throughout the year,an average of $120,000 in receivables outstanding would imply what averagecollection period? Given the terms stated, what dollar amount would youexpect to receive for your receivables?

Step 1: Define Average Collection Period and FactoringThe average collection period measures the…

Answered: Assume that your business resulted in…

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

Problem 2MC

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You own a company. This company’s projected revenue is $30,000 for year 1, $31,000 for year 2, and $32,000 for year 3. From the 4th year onwards, revenue is expected to be 5% higher than the previous year. Assume the appropriate nominal discount rate is 8%, and all revenue is collected at the end of each year.Determine the present value of your sales revenue for the first 15 years, round to 2 decimal places.
Financial Accounting
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