During the next four months, a furniture manufacturer will be entering its holiday season. Management expects commercial trade receivables to reach $600,000 and will be seeking a bank loan that will finance 40% of the receivables. The bank charges 10% and an additional 1% service fee of the pledged trade receivables. The average collection period is 45 days. Calculate the company's APR for the pledged trade receivables.

During the next four months, a furniture manufacturer will be entering its holiday season. Management expects commercial trade receivables to reach $600,000 and will be seeking a bank loan that will finance 40% of the receivables. The bank charges 10% and an additional 1% service fee of the pledged trade receivables. The average collection period is 45 days. Calculate the company's APR for the pledged trade receivables.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 24P

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