Problem 18-7 Factoring Receivables

Your firm has an average collection period of 39 days. Current practice is to factor all receivables immediately at a discount of 2 percent. Assume that default is extremely unlikely and that there are 365 days in a year. What is the effective cost of borrowing in this case? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Effective cost %