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How to determine what is the effective annual interest rate

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Reference no: EM132600585

Problem 1: A firm has $600,000 in receivables which it sells to a factor at a 3% discount. The average collection period is one month. What is the effective annual interest rate on the factoring arrangement?

Option 1: 42.58%

Option 2: 44.13%

Option 3: 37.12%

Option 4: 36.00%

Reference no: EM132600585

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