A firm has 500000 in accounts receivable a commercial bank


A firm has $500,000 in accounts receivable. A commercial bank will accept these accounts receivable as collateral and will advance the firm 75% of the accounts receivable amount on loan at 6%. The bank charges a $5,000 credit checking fee. The firm will use the agreement for 90 days. What is the effective annual rate?

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Financial Management: A firm has 500000 in accounts receivable a commercial bank
Reference No:- TGS01420320

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