5 Your firm has an average collection period of 31 days. Current practice is to factor all receivables immediately at a discount of 1.25 percent. Assume that default is extremely unlikely 10 points What is the effective cost of borrowing in this case? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g. 32.16.) NOTE: If we factor immediately, we receive cash an average of 31 days sooner. The number of periods in a year are: Skipped Number of periods (m) 365/31 Number of periods (m) 11.774193548 Hint: Use the EAR equation. eBook Effective cost Hint Print References