Based on the information provided in the financial statements, if Spread the Joy Organics Inc. has an all-in rate of 5.5% on their operating line of credit, what is the bank's prime rate?
Review Later
3.25%
3.5%
3.0%
3.75
\begin{tabular}{|c|c|c|c|c|c|c|c|} \hline & 201 & 200 & & 201 & 200 & & \\ \hline ASSETS & & & REVENUES & $2,296,165 & $2,050,877 & Credit Line: & 500,000 \\ \hline CURRENT & & & & & & Spread: & \\ \hline Cash & $72,517 & $9,146 & COST OF SALES & 1,554,917 & 1,334,651 & Prime: & 3.00% \\ \hline Sales tax receivable & 15,959 & 12,841 & & & & Total Rate: & \\ \hline Inventory & 796,513 & 644,587 & GROSS MARGIN & 741,248 & 716,226 & & \\ \hline \multirow[t]{4}{*}{ Accounts receivable } & 362,885 & 308,266 & & & & New Term Loan: & 500,000 \\ \hline & & & EXPENSES & & & Amortization (months): & 72 \\ \hline & 1,247,874 & 974,840 & Advertising and promotion & 17,185 & 15,285 & Rate: & 5.20% \\ \hline & & & Bank charges & 9,886 & 10,724 & Rate Monthly: & \\ \hline \multirow[t]{2}{*}{ EQUIPMENT (Note 3) } & 692,554 & 704,744 & Business taxes, licenses and memberships & 9,147 & 8,998 & Monthly Payment: & \\ \hline & & & Courier and postage & 6,238 & 4,775 & Total Annual Payments: & \\ \hline \multirow[t]{3}{*}{ Total Assets } & $1,940,428 & $1,679,584 & Depreciation & 94,722 & 98,255 & & \\ \hline & & & Insurance & 3,516 & 3,895 & & \\ \hline & & & Interest & 29,638 & 25,022 & & \\ \hline LIABILITIES & & & Office and administration & 5,286 & 5,157 & & \\ \hline CURRENT & & & Repairs and maintenance & 9,214 & 10,916 & & \\ \hline Bank line of credit & 441,589 & 358,733 & Salaries and wages & 315,950 & 301,964 & & \\ \hline \multirow[t]{3}{*}{ Salaries payable } & 13,955 & 12,650 & Software and computers & 4,288 & 1,961 & & \\ \hline & & & Telephone & 958 & 854 & & \\ \hline & 780,098 & 598,280 & Warehouse & 56,255 & 64,266 & & \\ \hline \multirow[t]{2}{*}{ DUE TO SHAREHOLDERS } & 914,412 & 914,412 & & 643,461 & 632,749 & & \\ \hline & 1,694,510 & 1,512,692 & NET INCOME BEFORE INCOME TAXES & 97,787 & 83,477 & & \\ \hline SHAREHOLDERS' EQUITY & & & INCOME TAXES & 18,761 & - & & \\ \hline Share capital (Note 4) & 100 & 100 & & & & & \\ \hline Retained earnings & 245,818 & 166,792 & NET INCOME & $79,026 & $83,477 & & \\ \hline Total Equity & 245,918 & 166,892 & & & & & \\ \hline \end{tabular}
