Question #24015

Beckheart is seeking financing for its inventory. Safe-proof Warehouses offers space in their facility for Beckheart’s inventory.

They offer loans with a 15 percent APR equal to 60 percent of the inventory. Monthly fees for the usage of the warehouse are $500 plus

0.5 percent of the inventory’s value. If Beckheart has saleable inventory of $2 million,

a. how much money can the firm borrow?

Amount able to borrow

b. what is the interest cost of the loan in dollars over a year?

Interest cost

c. what is the total amount of fees to be paid in a year?

Monthly fee

Annual fee

d. what is the effective annual rate of using Safe-proof to finance Beckheart’s inventory?

Interest cost plus fees

Effective cost

They offer loans with a 15 percent APR equal to 60 percent of the inventory. Monthly fees for the usage of the warehouse are $500 plus

0.5 percent of the inventory’s value. If Beckheart has saleable inventory of $2 million,

a. how much money can the firm borrow?

Amount able to borrow

b. what is the interest cost of the loan in dollars over a year?

Interest cost

c. what is the total amount of fees to be paid in a year?

Monthly fee

Annual fee

d. what is the effective annual rate of using Safe-proof to finance Beckheart’s inventory?

Interest cost plus fees

Effective cost

Expert's answer

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