A bank has chosen eight accounts receivable from scientific software inc, totaling 134,000 that it will accept as collateral. Banks terms include a lending rate set at prime plus 3% and a 2% commission charge. The prime rate currently is 8.5%

A. The bank will adjust the accounts by 10% for returns and allowances. It will then lend up to 85% of the adjusted acceptable collateral. What is the maximum amount the bank will lend to scientific software inc.

B. what is scientific softwarea effective annual rate of interest if it borrows 100,000 for 12 months? For 6 months? For 3 months? (Assume 365 day year and prime rate remains at 8.5%)