Charmin paper company | Business & Finance homework help

Charmin Paper Company sells to the 12 accounts listed below.                                      Account Receivable Balance Outstanding Average of the Account over the Last Year                                                 A  $60,000 28                 B  120,000 43                 C  70,000 10                 D  20,000 52                 E  50,000 42                 F  220,000 34                 G  30,000 16                 H  300,000 65                 I  40,000 33                 J  90,000 50                 K  210,000 14                 L  60,000 35                                                             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 8.5 percent, and Capital charges 3.5 percent over prime to Charmin as its annual loan rate. a. Determine the maximum loan for which Charmin Paper Company could qualify. b. Determine how much one month’s interest expense would be on the loan balance determined in part a.

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