Your firm has an average collection period of 38 days. Current practice is to factor all receivables immediately at a discount of 1.75 percent. Assume that default is extremely unlikely.

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.)

Effective cost of borrowing

%.

NOTE: THE ANSWERS IS NOT 18.13%