P15-20 (similar to) Question Help Inventory financing Raymond Manufacturing faces a liquidity crisis-it needs a loan of $143,000 for 1 month. Having no source of additional unsecured borrowing the firm must find a secured short-term lender. The firm's accounts receivable are quite low, but its inventory is considered liquid and reasonably good collateral. The book value of the inventory is $429,000, of which $171,600 is finished goods. (Note: Assume a 365-day year.) 1) City Wide Bank will make a $143,000 trust receipt loan against the finished goods inventory. The annual interest rate on the loan is 11.5% on the outstanding loan balance plus a 0.21% administration fee levied against the $143,000 initial loan amount. Because it will be liquidated as inventory is sold, the average amount owed over the month is expected to be $105,380 (2) Sun State Bank will lend $143,000 against a floating lien on the book value of inventory for the 1-month period at an annual interest rate of 13.1% 3 Citizens Bank and Trust will lend $143,000 against a warehouse receipt on the finished goods inventory and charge 15.6% annual interest on the outstanding loan balance. A 0.55% warehousing fee will be levied against the average amount borrowed. Because the loan will be liquidated as inventory is sold, the average loan balance is expected to be $85,800 a. Calculate the dollar cost of each of the proposed plans for obtaining an initial loan amount of $143,000 b. Which plan do you recommend? Why? c. If the firm had made a purchase of $143,000 for which it had been given terms of 2/15 net 34, would it increase the firm's profitability to give up the discount and not