Question
Accounts receivable as collateral, cost of borrowing Maximum Bank has analyzed the accounts receivable of Scientific Software, Inc. The bank has chosen eight accounts totaling
Accounts receivable as collateral, cost of borrowing Maximum Bank has analyzed the accounts receivable of Scientific Software, Inc. The bank has chosen eight accounts totaling $180000 that it will accept as collateral. The bank's terms include a lending rate set at prime +2.5% and a 1.5% commission charge. The prime rate currently is 7%.
a. The maximum amount that the bank will lend to Scientific Software is $ enter your response here. (Round to the nearest dollar.) Part 2 b. If the firm borrows $120000 for 12 months, the effective annual rate is enter your response here%. (Round to two decimal places.) Part 3 If the firm borrows $120000 for only 6 months, the effective annual rate is enter your response here%. (Round to two decimal places.) Part 4 If the firm only borrows $120000 for 3 months, the effective annual rate is enter your response here%. (Round to two decimal places.)
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