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10.18 A floor plan financier agrees to lend a car dealer funds to buy stock up to a limit of $1 million. The first order
10.18 A floor plan financier agrees to lend a car dealer funds to buy stock up to a limit of $1 million. The first order under this scheme is for 25 sedans which average $23000 each with all ordered optional extras included. The cars are delivered and the invoice paid by the financier on Monday, 1 October. The interest is 6.5% pa, charged monthly on the balance at 5.00 pm each Friday. Five vehicles are sold in the first week, and six in the second week, at an average price of $30000 each. The dealer pays the financier at cost price electronically on Saturday each week for the vehicles sold during that week. The dealer re-orders vehicles at the end of the second week, and 10 new vehicles are delivered and paid for by the financier on the Monday of the fourth week at the same average price as the original lot. Sales comprise five vehicles in each of weeks 3 and 4, and two in the last few days in the month. How much does the dealer owe the financier on the first day of the new month
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