Compost Wholesalers presently uses a public varehouse agreement to finance most of its hventory. The average amount of inventory i $4,000,000, the bank lends Compost's 70 percent of the value of the inventory, and the oublic warehouse fee is $2,500 per week. otal transportation cost for the loan period is -.5 percent of the average value of the nventory [that is, (0.015)($4,000,000)], the pank will loan at 5.5 % for the 6-week loan. A. Find the loan amount 3. Find the interest C. Find other costs/fees

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Compost Wholesalers presently uses a public
warehouse agreement to finance most of its
inventory. The average amount of inventory is
$4,000,000, the bank lends Compost's 70
percent of the value of the inventory, and the
public warehouse fee is $2,500 per week.
Total transportation cost for the loan period is
1.5 percent of the average value of the
inventory [that is, (0.015)($4,000,000)], the
bank wil loan at 5.5 % for the 6-week loan.
A. Find the loan amount
B. Find the interest
C. Find other costs/fees
D. Find period rate
E. Find m
F. Find the annual percentage rate (APR) G.
Find the effective annual cost (EAR)
Transcribed Image Text:Compost Wholesalers presently uses a public warehouse agreement to finance most of its inventory. The average amount of inventory is $4,000,000, the bank lends Compost's 70 percent of the value of the inventory, and the public warehouse fee is $2,500 per week. Total transportation cost for the loan period is 1.5 percent of the average value of the inventory [that is, (0.015)($4,000,000)], the bank wil loan at 5.5 % for the 6-week loan. A. Find the loan amount B. Find the interest C. Find other costs/fees D. Find period rate E. Find m F. Find the annual percentage rate (APR) G. Find the effective annual cost (EAR)
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