After factoring all receivables at 2% discount, the remaining part will be 100%-2%=98%
Effective annual rate is
=(1+(2%/98%))^(365/43) -1
=(1.02)^(365/43) -1
=1.183045527 -1
=0.183045527
=18.30% (Rounded to two decimal places)
Effective annual rate =18.30%
Your firm has an average collection period of 43 days. Current practice is to factor all...
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