Question
Charmin Paper Company sells to the 12 accounts listed next. Account Receivable Balance Outstanding Average Age of the Account Over the Last Year A $
Charmin Paper Company sells to the 12 accounts listed next. |
Account | Receivable Balance Outstanding | Average Age of the Account Over the Last Year | ||||
A | $ | 69,500 | 21 | |||
B | 205,000 | 43 | ||||
C | 78,900 | 11 | ||||
D | 20,500 | 59 | ||||
E | 56,400 | 43 | ||||
F | 301,000 | 35 | ||||
G | 38,900 | 22 | ||||
H | 333,000 | 68 | ||||
I | 44,500 | 34 | ||||
J | 98,300 | 50 | ||||
K | 292,000 | 17 | ||||
L | 68,500 | 37 |
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 9.50 percent, and Capital charges 4.50 percent over prime to Charmin as its annual loan rate. |
a. | Determine the maximum loan for which Charmin Paper Company could qualify. |
Maximum loan amount | $ |
b. | Determine how much one months interest expense would be on the loan balance determined in parta.(Do not round intermediate calculations. Round your final answer to 2 decimal places.) |
Interest expense | $ |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started