What is the firm effective cost of borrowing

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Reference no: EM131354972

1. Which of the following statements is (are) the most correct?

A. Sensitivity study is a technique in which key variables are changed one at a time.

B. Scenario study is a technique in which “bad” and “good” sets of financial circumstances are compared with a most likely situation.

C. Monte Carlo Simulation is a technique in which probable future events are simulated on a computer.

D. Breakeven is a technique to determine the level of sales at which a project would just break even.

E. All the above are correct.

2. H&H Companies has an average collection period of 43 days and factors all of its receivables immediately at a discount of 1.1 percent. Assume all accounts are collected in full. What is the firm's effective cost of borrowing?

A. 9.68 percent B. 9.73 percent C. 9.97 percent D. 9.84 percent E. 10.07 percent

Reference no: EM131354972

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