Question

Your firm has an average collection period of 20 days. Current
practice is to factor all receivables immediately at a discount of
1 percent. Assume that default is extremely unlikely. What is the
effective cost of borrowing? (Do not round intermediate
calculations and enter your answer as a pecent rounded to 2 decimal
places, e.g., 32.16.)

Answer #1

Problem 18-7 Factoring Receivables [LO3]
Your firm has an average collection period of 22 days. Current
practice is to factor all receivables immediately at a discount of
1.2 percent. Assume that default is extremely unlikely.
What is the effective cost of borrowing? (Do not round
intermediate calculations and enter your answer as a pecent rounded
to 2 decimal places, e.g., 32.16.)

The firm has an average collection period of 34 days. Current
practice is to factor all receivables immediately at a discount
rate of (1+0.1*4)%. Assume that default is extremely unlikely. What
is the effective annual interest rate on this arrangement?
A) 11.39 percent
B) 12.61 percent
C) 13.84 percent
D) 15.08 percent
E) 16.34 percent

The firm has an average collection period of 34 days. Current
practice is to factor all receivables immediately at a discount
rate of (1+0.1*x)%. Assume that default is extremely unlikely. What
is the effective annual interest rate on this arrangement? A) 11.39
percent B) 12.61 percent C) 13.84 percent D) 15.08 percent E) 16.34
percent
LET X BE 0

The Paden Corporation has annual sales of $92 million. The
average collection period is 54 days. What is the average
investment in accounts receivable as shown on the balance sheet?
(Use 365 days per year. Enter your answer in dollars, not
millions of dollars, e.g., 1,234,567. Do not round intermediate
calculations and round your answer to the nearest whole number,
e.g., 32.)
Average accounts receivable
$
Essence of Skunk Fragrances, Ltd., sells 7,300 units of its
perfume collection each...

A firm offers terms of 1/10, net 35.
a. What effective annual interest rate does the firm earn when a
customer does not take the discount? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
b. What effective annual interest rate does the firm earn if the
discount is changed to 2 percent? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2
decimal places,...

The Newkirk Corporation has annual credit sales of $29 million.
The average collection period is 34 days.
(Enter your answer as directed, but do not
round intermediate calculations.)
Required:
What is the average investment in accounts receivable as shown
on the balance sheet? (Enter your answer
in dollars, not millions of dollars (e.g., 1,234,567). Round your
answer to 2 decimal places (e.g., 32.16).)
Average receivables
$

A firm offers terms of 1.4/10, net 60.
a.
What effective annual interest rate does the firm earn when a
customer does not take the discount? (Use 365 days a year.
Do not round intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.)
b.
What effective annual interest rate does the firm earn if the
terms are changed to 2.4/10, net 60, and the customer does not take
the discount? (Use 365...

A firm offers terms of 1.8/10, net 30.
a.
What effective annual interest rate does the firm earn when a
customer does not take the discount? (Use 365 days a year.
Do not round intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.)
b.
What effective annual interest rate does the firm earn if the
terms are changed to 2.8/10, net 30, and the customer does not take
the discount? (Use 365...

XYZ has accounts receivable with an average collection period of
25 days. A factor is willing to finance the accounts receivable at
99% of face value. What is the effective annual rate on this
financing?
A. 14.0%
B. 15.8%
C. 21.2%
D. none of the above

A bank offers your firm a revolving credit arrangement for up to
$50 million at an interest rate of 1.25 percent per quarter. The
bank also requires you to maintain a compensating balance of 3
percent against the unused portion of the credit line, to
be deposited in a noninterest-bearing account. Assume you have a
short-term investment account at the bank that pays .60 percent per
quarter, and assume that the bank uses compound interest on its
revolving credit loans....

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 27 seconds ago

asked 10 minutes ago

asked 27 minutes ago

asked 33 minutes ago

asked 46 minutes ago

asked 48 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago