A commercial finance company is lending to an expanding firm based on warehouse receipt arrangement at 18% nominal rate. The finance company will advance up to 80% of the value of the inventory the firm is planning to purchase. The estimated value of the inventory is P100,000. A field warehouse company will be hired to manage the inventory security in behalf of the commercial finance company. The field warehouse company charges a flat annual fee of P6,000 plus 1% of total inventory warehoused. The remaining required balance will be obtained from trade credit of 3/12 net 30. The commercial finance company is only willing to push through with this arrangement if it is renewable on a per 6-months period. What would be annual percent interest cost of this whole loan package? (Use 4 decimal places in computation).
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