Question
The Clear Water Company would be permitted to borrow up to 65% of its current account receivables balance of $750,000 for 90 days. The annual
The Clear Water Company would be permitted to borrow up to 65% of its current account receivables balance of $750,000 for 90 days. The annual interest rate would be 12 percent due at maturity. The lender also charges a service fee of 2% of the account receivables balance, which is due at the time of borrowing agreement and NOT at maturity. What is annual cost of financing for Clear Water?
The Clear Water Company would be permitted to borrow up to 65% of its current account receivables balance of $750,000 for 90 days. The annual interest rate would be 12 percent due at maturity. The lender also charges a service fee of 2% of the account receivables balance, which is due at the time of borrowing agreement and NOT at maturity. What is annual cost of financing for Clear Water?
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Contemporary Financial Management
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
10th Edition
978-0324289114, 0324289111
