Should they be granted a line of credit? why or why not?

LOAN DETAILS LAF has requested a line of credit of US$60,000 to cover production costs during the seasonal increase in business. Kent Bank uses the following terms on its lines of credit. All borrowing is done at the beginning of the month in whole dollar increments. All repayments are made at the end of the month in whole dollar increments. The full line of credit is expected to be paid off by the end of the quarter with all the interest repaid at the end of the quarter. The interest rate on this loan is 16% per year. Break-Even Point, Margin of Safety, and Percent Drop to Break-Even Break-Even Point Monthly basis Sales Price per Unit $120 35.00 20.00 Variable Raw Materials per Unit Variable Direct Labor per Unit Variable MOHD per Unit Variable S&A cost per Unit Total Variable Costs $ $ $ $ $ 20.00 1.25 76.25 Contribution Margin $43.75 Fixed MOHD per month Fixed S&A Cost per Month Total Fixed Costs $ 57,950.00 $ 63,000.00 $ 120,950.00 Monthly Break-Even Point in Units Monthly Break-Even Point in Sales Dollars Quarterly Break-Even Point in Sales Dollars 2764.57 $331,748.57 $995,245.71 Margin of Safety Budgeted Quarterly Net Sales ($) (Reduce sales by 5% uncollectable) Quarterly Break-Even Point in Sales Dollars Margin of Safety $ 1,311,000 $995,245.71 $ 315,754.29 Percentage Drop to Break-Even for the Quarter Margin of Safety Budgeted Quarterly Net Sales ($) Percentage Drop to Break-Even $ 315,754.29 $ 1,311,000 24.08% Schedule 11 April $ Cash Budget (US$) May June Quarter 37,745 $ 30,000 $30,000 $ 37,745 Beginning Cash balance Add: Receipts Cash collections Total Cash Available $ 252,000 $ 453,000 $ 540,000 $ 1,245,000 $ 289,745 $ 483,000 $ 570,000 $ 1,282,745 Less disbursements Cash Payments for Materials Total Direct Labor Cost ($) Cash Disbursements for MOHD Cash Disbursements for S&A Dividends Equipment purchases Total Disbursements $ 118,420 $156,730 $ 130,200 $ 405,350 $ 65,800 $ 108,000 $ 58,000 $ 231,800 $ 54,400 $ 64,950 $ 52,450 $ 171,800 $ 56,125 $ 60,500 $ 56,750 $ 173,375 $ 15,000 $15,000 $15,000 $ 45,000 $ 47,820 $ 154,600 $ 202,420 $ 309,745 $453,000 $ 467,000 $ 1,229,745 Excess (deficiency) of cash available $ (20,000) $ 30,000 $ 103,000 $ 53,000 Financing: note 1 Beginning of month loan balance $ Borrowing during month $ Subtotal due before interest calc. $ Interest accrual at month end $ Loan balance before loan repayment $ Loan repayment $ Total loan balance at month end (P+1) $ $ 50,667 $ 51,333 $ 50,000 $ $ $ 50,000 $ 50,667 $ 51,333 $ 667 $ 667 $ 667 $ 50,667 $ 51,333 $ 52,000 $ $ $ (52,000) $ 50,667 $ 51,333 $ $ 50,000 50,000 2,000 52,000 (52,000) Ending Cash Balance $ $ 30,000 $30,000 $ 51,000 $ 51,000