Compost Wholesalers presently uses a public warehouse agreement to finance most of its inventory. The average...

 

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Compost Wholesalers presently uses a public warehouse agreement to finance most of its inventory. The average amount of inventory is $4,000,000, the bank will loan at 5.5% per annum for the 6-week loan. The loan amount will be against 70 percent of the value of the inventory, and the public warehouse fee is $2,500 per week. Total transportation cost for the loan period is 1.5 percent of the average value of the inventory [that is, (0.015) ($4,000,000) 1. A. Find the loan amount B. Find the interest. C. Find other costs/fees D. Find period rate. E. Find m F. Find the annual percentage rate (APR) G. Find the effective annual cost (EAR) Compost Wholesalers presently uses a public warehouse agreement to finance most of its inventory. The average amount of inventory is $4,000,000, the bank will loan at 5.5% per annum for the 6-week loan. The loan amount will be against 70 percent of the value of the inventory, and the public warehouse fee is $2,500 per week. Total transportation cost for the loan period is 1.5 percent of the average value of the inventory [that is, (0.015) ($4,000,000) 1. A. Find the loan amount B. Find the interest. C. Find other costs/fees D. Find period rate. E. Find m F. Find the annual percentage rate (APR) G. Find the effective annual cost (EAR)

Answer rating: 100% (QA)

A Loan Amount 70 4000000 2800000 B Interest 55 2800000 6 weeks 97200 C Other CostsFees 2500 6 ... View the full answer