Determine the maximum loan for which charming paper company

Assignment Help Financial Management

Reference no: EM131455957

Charming Paper Company sells to the 12 accounts listed here. Account Receivable Balance Outstanding Average Age of the Account Over the Last Year A $ 63,600 25 B 133,000 43 C 73,300 19 D 29,100 57 E 56,100 42 F 253,000 39 G 33,400 24 H 349,000 67 I 45,300 32 J 90,600 59 K 237,000 15 L 61,000 37 Capital Financial Corporation will lend 90 percent against account balances that have averaged 30 days or less; 80 percent for account balances between 31 and 40 days; and 70 percent for account balances between 41 and 45 days. Customers that take over 45 days to pay their bills are not considered acceptable accounts for a loan. The current prime rate is 12.50 percent, and Capital charges 4.50 percent over prime to Charming as its annual loan rate.

a. Determine the maximum loan for which Charming Paper Company could qualify.

b. Determine how much one month’s interest expense would be on the loan balance determined in part a. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Reference no: EM131455957

Questions Cloud

Basic financial statements in the most recent annual report : Look at the four basic financial statements in the most recent annual report (listed as "10K") for any publicly traded corporation.

Compute the present value of each alternative : Assuming you could earn 6 percent annually, compute the present value of each alternative:

Associated with proving the validity of security market line : Which of the following is NOT a problem associated with proving the validity of the security market line?

Two mutually exclusive projects : Timco is considering two mutually exclusive projects. Project X costs 100 and provides after tax inflows of 88 per year for 2 years.

Determine the maximum loan for which charming paper company : Charming Paper Company sells to the 12 accounts listed here. Determine the maximum loan for which Charming Paper Company could qualify.

What is the sales revenue under optimistic case : The Adept Co. is analyzing a proposed project. What is the sales revenue under the optimistic case scenario?

Find the equivalent annual annuity value : Find the equivalent annual annuity value needed to compare it to a six year project.

Negotiated price-required markup and customer price point : Based on the negotiated price, BestBuy's required markup and the customer price point,

What is the sales revenue under the optimistic case scenario : The Adept Co. is analyzing a proposed project. What is the sales revenue under the optimistic case scenario?

User Account

All Pages