Question

15) Charmin Paper Company sells to the 12 accounts listed next.   AccountReceivable
Balance OutstandingAverage Age of
the Account
Over the Last YearA$68,000  24 B 150,000  44 C 72,500  17 D 23,200  60 E 50,600  42 F 272,000  39 G 30,200  23 H 342,000  71 I 42,200  38 J 90,200  53 K 302,000  19 L 60,500  35   
    Capital Financial Corporation will lend 90 percent against account balances that have averaged 30 days or less; 80 percent for account balances between 31 and 40 days; and 70 percent for account balances between 41 and 45 days. Customers that take over 45 days to pay their bills are not considered acceptable accounts for a loan.  
    The current prime rate is 14.50 percent, and Capital charges 4.50 percent over prime to Charmin as its annual loan rate.  
a.Determine the maximum loan for which Charmin Paper Company could qualify.  
  Maximum loan amount$    
b.Determine how much one month’s interest expense would be on the loan balance determined in part a. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)         Interest expense$  

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