The Odessa Supply Company is considering obtaining a loan from a sales finance company secured by inventories
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The Odessa Supply Company is considering obtaining a loan from a sales finance company secured by inventories under a field warehousing arrangement. Odessa would be permitted to borrow up to $300,000 under such an arrangement at an annual interest rate of 10 percent. The additional cost of maintaining a field warehouse is $16,000 per year. Determine the annual financing cost of a loan under this arrangement if Odessa borrows the following amounts:
a. $300,000
b. $250,000
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Related Book For
Contemporary Financial Management
ISBN: 9780324289114
10th Edition
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
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