Maximum Bank has analyzed the accounts receivable of Scientific Software, Inc. The bank has chosen eight accounts totaling $134,000 that it will accept as collateral. The bank’s terms include a lending rate set at prime 3% and a 2% commission charge. The prime rate currently is 8.5%. 1.The bank will adjust the accounts by 10% for returns and allowances. It then will lend up to 85% of the adjusted acceptable collateral. What is the maximum amount that the bank will lend to Scientific Software? Format: 111,111 2.What is Scientific Software’s effective annual rate of interest if it borrows $100,000 for 12 months? (Note: Assume a 365- day year and a prime rate t
Maximum Bank has analyzed the
1.The bank will adjust the accounts by 10% for returns and allowances. It then will lend up to 85% of the adjusted acceptable collateral. What is the maximum amount that the bank will lend to Scientific Software? Format: 111,111
2.What is Scientific Software’s effective annual rate of interest if it borrows $100,000 for 12 months? (Note: Assume a 365- day year and a prime rate that remains at 8.5% during the life of the loan.) Format: 11.1%
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
