Lothbrok Industries Ltd. Income Statement (Millions USD) Revenue Cost Of Goods Sold Gross Profit Selling General & Admin Exp. Depreciation & Amort. Operating Income Interest Expense Earnings Before Tax Income Tax Expense Net Income 2020 270 154 116 74 10 32 6 26 18 Per Share Items EPS Common Shares Outstanding (millions) Dividends per Share Payout Ratio $0.40 44.1 $0.15 36.9% 2019 2020 Lothbrok Industries Ltd. Balance Sheet, (millions USD) ASSETS Cash And Equivalents Accounts Receivable Inventory Prepaid Exp. Total Current Assets Gross Property, Plant & Equipment Accumulated Depreciation Net Property, Plant & Equipment Other Non-operating Assets Total Assets 21 115 4. 140 230 (88) 142 50 332 21 120 4 145 244 (86) 158 52 355 26 25 8 27 LIABILITIES Accounts Payable Accrued Exp. Short-term Borrowings Other Current Liabilities Total Current Liabilities Long-Term Debt Other Non-Current Liabilities Total Liabilities 11 71 76 18 165 37 14 77 70 29 176 Total Equity Total Liabilities And Equity 167 332 179 355 Based on the financial information provided for Lothbrok Industries, Lothbrok Industries is evaluating the following two independent short-term financing arrangements. What is the effective annual cost (%) for each financing alternative? (b) A 90 day inventory loan from Commercial Bank of Ontario with the following terms: (3 marks) Inventory value based on the 2020 balance sheet Loan will be 10% of collateral value Prime rate is 3% annually Field warehouse loan fee of $180 per day Loan rate is 2% over prime