How much money can the firm borrow

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Plancoet is seeking finance for its inventory. Safe-proof Warehouses offers space in their facility for Plancoet's inventory. They offer loans with a 15% APR equal to 60% of the inventory. Monthly fees for the usage of the warehouse are $500 plus 0.5% of the inventory's value. If Plancoet has saleable inventory of $2 million:

  • How much money can the firm borrow?
  • What is the interest cost of the loan in dollars over a year?
  • What is the total amount of fees to be paid in a year?

Reference no: EM131105221

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