Inventory financing Raymond Manufacturing faces a liquidity crisisit needs a loan of $111,000 for 1 month. Having no source of additional unsecured borrowing, the firm must find a secured source of short-term lending

Inventory financing Raymond Manufacturing faces a liquidity crisisit needs a loan of $111,000 for 1 month. Having no source of additional unsecured borrowing, the firm must find a secured source of short-term lending. The firm's accounts receivable are quite low, but its inventory is considered liquid and reasonably good collateral. The book value of Raymond's inventory is $333,000, of which $133,200 is finished goods. (Note: Assume a 365-day year.) (1) City-Wide Bank will make a $111,000 trust receipt loan against the inventory of finished goods. The annual interest rate on the loan is 11.9% on the outstanding loan balance plus a 0.16% administration fee levied against the $111,000 initial loan amount. Because the loan will be repaid as inventory is sold, the average loan amount owed over the month is expected to be $82,074. (2) Sun State Bank will lend $111,000 against a floating lien on the book value of inventory for the 1-month period at an annual interest rate of 12.5%. (3) Citizens' Bank and Trust will lend $111,000 against a warehouse receipt on the finished goods inventory and charge 15.5% annual interest on the outstanding loan balance. A 0.51% warehousing fee will be levied against the average amount borrowed. Because the loan will be repaid as inventory is sold, the average loan balance is expected to be $66,600. a. Calculate dollar cost each of the proposed plans for obtaining an initial loan amount of $111,000. b. Which plan do you recommend? Why? c. If the firm had made a purchase of $111,000 for which it had been given terms of 2/5 net 24, would it increase the firm's profitability to give up the discount and not borrow as recommended in part b? Why or why not? a. The dollar cost of the trust receipt loan is $. (Round to the nearest cent.)