ch.8 Q3

Charming Paper Company sells to the 12 accounts listed here.

Account	Receivable Balance Outstanding			Average Age of the Account Over the Last Year
A	$	60,800			22
B		172,000			44
C		76,100			14
D		29,400			59
E		58,300			43
F		238,000			36
G		33,800			18
H		367,000			70
I		43,500			38
J		99,300			51
K		241,000			14
L		63,200			39
Capital Financial Corporation will lend 90 percent against account balances that have averaged 30 days or less; 80 percent for account balances between 31 and 40 days; and 70 percent for account balances between 41 and 45 days. Customers that take over 45 days to pay their bills are not considered acceptable accounts for a loan. The current prime rate is 17.50 percent, and Capital charges 3.50 percent over prime to Charming as its annual loan rate. a. Determine the maximum loan for which Charming Paper Company could qualify

Maximum loan maount?

b. Determine how much one months interest expense would be on the loan balance determined in part a. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Interest Expense?