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Effective annual interest rate on the factoring arrangement

Problem:

A firm sells its accounts receivables to a factor at a 1.5 percent discount. The average collection period is 1 month. What is the implicit effective annual interest rate on the factoring arrangement? Suppose the average collection period is 1.5 months. How does this affect the implicit effective annual interest rate?

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Finance Basics: Effective annual interest rate on the factoring arrangement

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