Brady and Sons uses accounts receivable as collateral to borrow money for operations and payroll when revenues are low. If the company borrows $300,000 now at an interest rate of 12% per year, compounded monthly, and the rate increases to 15% per year, compounded monthly after 4 months, how much will the company owe at the end of 1 year?
What will be an ideal response?
Rates are 1%, increasing to 1.25% per month
F = 300,000(F/P,1%,4)(F/P,1.25%,8)
= 300,000(1.0406)(1.1045)
= $344,803
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