Question
Jordan obtained a $160,000 line of credit from Craig Bank on January 1, Year 1. Jordan agreed to accept a variable interest rate that was
Jordan obtained a $160,000 line of credit from Craig Bank on January 1, Year 1. Jordan agreed to accept a variable interest rate that was set at 2% above the bank's prime lending rate. The bank's prime rate of interest and the amounts borrowed or repaid during the first three months of Year 1 are shown in the following table. Assume that Jordan borrows or repays on the first day of each month.
| Amt Borrowed (Repaid) | Prime Rate for the Month | ||||||
| 1-Jan | $ | 40,000 | 4.0 | % | |||
| 1-Feb | (10,000 | ) | 4.5 | % | |||
| 1-Mar | 40,000 | 5.0 | % | ||||
What is the amount of interest expense recognized in March?
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Corporate Finance Core Principles and Applications
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford
3rd edition
978-0077971304, 77971302, 978-0073530680, 73530689, 978-0071221160, 71221166, 978-0077905200
