Your firm has an average collection period of 27 days. The current practice is to factor all receivables immediately at a discount of 2.2 percent. Assume that default is extremely unlikely. What is the effective cost of borrowing? (365 in year)

icon
Related questions
Question

What is the effective cost borrowing?

Your firm has an average collection
period of 27 days. The current practice is
to factor all receivables immediately at a
discount of 2.2 percent. Assume that
default is extremely unlikely. What is the
effective cost of borrowing? (365 in year)
Transcribed Image Text:Your firm has an average collection period of 27 days. The current practice is to factor all receivables immediately at a discount of 2.2 percent. Assume that default is extremely unlikely. What is the effective cost of borrowing? (365 in year)
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer