P15-18 (similar to) Question Help o 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 $180,000 that it will accept as collateral. The bank's terms include a lending rate set at prime +2.5% and a 1.5% commission charge. The prime rate currently is 10%. a. The bank will adjust the accounts by 10% for returns and allowances. It then will lend up to 90% 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 $115,000 for 12 months? For 6 months? For 3 months? (Note: Assume a 365-day year and a prime rate that remains at 10% during the life of the loan.) P15-15 (similar to) Question Help Cost of commercial paper Commercial paper is usually sold at a discount. Fan Corporation has just sold an issue of 126-day commercial paper with a face value of $0.9 million. The firm has received initial proceeds of $882,674 (Note: Assume a 365-day year.) a. What effective annual rate will the firm pay for financing with commercial paper, assuming that it is rolled over every 126 days throughout the year? b. If a brokerage fee of $8,724 was paid from the initial proceeds to an investment banker for selling the issue, what effective annual rate will the firm pay, assuming that the paper is rolled over every 126 days throughout the year