Question: Parvis Manufacturing and Service Company holds a sizable inventory of
Parvis Manufacturing and Service Company holds a sizable inventory of dryers and washing machines, which it hopes to sell to retail dealers over the next six months. These appliances have a total estimated market value currently of $30 million. The firm also reports accounts receivable currently amounting to $24,650,000. Under the guidelines for taking collateral discussed in this chapter, what is the minimum size loan or credit line Parvis is likely to receive from its principal lender? What is the maximum size loan or credit line Parvis is likely to receive?
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