Beck heart's inventory
We need to find the borrowed money, interest cost of the loan, total amount of fee and effective annual rate
Solution:
Beck heart has saleable inventory of $2 million
a).
money borrowed by firm = 60 % of $2 million
=10060×2000000=$1200000
b).
Interest cost of the loan over a year = 15% of 1200000
=10015×1200000=$180000
c).
Total amount of fees to be paid in a year =
=(12×500)+(2000000×0.5×12)
=6000+120000=$126000 d).
Effective annual rate of using safe - proof to finance Beck heart's inventory
=2000000$180000+126000×100%=15.3%
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