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Question(s) / Instruction(s):

A firm has an average collection period of 35 days and factors all of its receivables immediately at a 0.95 percent discount. Assume all accounts are collected in full. What is the firm's effective cost of borrowing?




a. 9.98 percent
b. 10.13 percent
c. 10.24 percent
d. 10.38 percent
e. 10.47 percent

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