Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Charming Paper Company sells to the 12 accounts listed here. Receivable Balance Outstanding Average Age of the Account Over the Last Year Account $63,400 B.

image text in transcribed

Charming Paper Company sells to the 12 accounts listed here. Receivable Balance Outstanding Average Age of the Account Over the Last Year Account $63,400 B. 165,000 77,300 21,600 50,000 297,000 32,200 349,000 40,100 98,500 229,000 63,000 12 34 23 31 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 16.50 percent, and Capital charges 4.50 percent over prime to Charming as its annual loan rate. a. Determine the maximum loan for which Charming Paper Company could qualify Maximum loan amount b. Determine how much one month's 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management Principles And Practices

Authors: Sudhindra Bhat

2nd Edition

8174465863, 978-8174465863

More Books

Students also viewed these Finance questions

Question

=+2 Which stock (share) has dropped the most?

Answered: 1 week ago

Question

1 Why might people resist change?

Answered: 1 week ago