Question
Greens Wholesalers presently uses an 80-day public warehouse agreement to finance most of its inventory. The average amount of inventory is $2,000,000, the bank lends
Greens Wholesalers presently uses an 80-day public warehouse agreement to finance most of its inventory. The average amount of inventory is $2,000,000, the bank lends Greens 70 percent of the value of the inventory, and the public warehouse fee is $200/day. Total transportation costs for the 80-day period make up 1 percent of the average value of the inventory [that is, (0.01)($2,000,000)], the prime rate is 4 percent, and the bank will loan at 6.5 percent above the prime rate. Find the loan amount. Find the interest. Find other fees. Find the APR. Find the EAR.
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