L$65$

P$15-18$ Accounts receivable as collateral, cost of borrowing Maximum Bank has analyzed the accounts receivable of Scientific Software, Inc. The bank has chosen eight accounts totaling $$134,000$ that it will accept as collateral. The bank's terms include a lending rate set at prime plus $3\%$ and a $2\%$ commission charge. The prime rate currently is $8\mathrm{.}5\%.$

a$.$ The bank will adjust the accounts by $10\%$ for returns and allowances. It then will lend up to $85\%$ of the adjusted acceptable collateral. What is the maximum amount that the bank will lend to Scientific Software?

b$.$ What is Scientific Software's effective annual rate of interest if it borrows $$100,000$ for $12$ months? For $6$ months? For $3$ months? $($Note: Assume a $365-$day year and a prime rate that remains at $8\mathrm{.}5\%$ during the life of the loan.$)$