Shatner\'s Fence Company borrowed $ 210, 000 from Harper Capital by issuing a 3-

Question

Shatner's Fence Company borrowed $ 210, 000 from Harper Capital by issuing a 3-year (36-month), 5 % note payable. Shatner's uses $ 245, 000 of its accounts receivable as collateral for the lending arrangement, transferring the right to the receivable payments if Shatner defaults on the loan. Shatner services the accounts receivable, sending bills and collecting the payment from customers. Shatner must pay Harper $ 6, 300 at the end of month regardless of the amount of the receivables it collects. At the end of the first month, Shatner has collected $ 5,700 of the receivables that are collateral for the loan and pays $ 6, 300 to Harper plus interest.

How to find out the interest expense

Explanation / Answer

Calculation of interest expenses:

Face Value = 210000

Redemption value = 226800(6300*12)

Total Interest Expense = 226800-210000=16800

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.