McKenzie Wood Products negotiated a $200,000 revolving line of credit with the Bank of Montreal at prime

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McKenzie Wood Products negotiated a $200,000 revolving line of credit with the Bank of Montreal at prime plus 2%. On the twentieth of each month, interest is calculated (up to but not including the twentieth) and deducted from the company’s chequing account. If the initial loan advance of $25,000 on July 3 was followed by a further advance of $30,000 on July 29, how much interest was charged on July 20 and August 20? The prime rate was at 8% on July 3 and fell to 7.75% on August 5.
Line of Credit
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...
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