Homework Answers
Total Applications processed = 30,000 *60% = 18000
| Charges: | $ | |
| Finance Charge collected | 18000 applications*(100-85)%*2000 $ *3.5% | 189,000.00 |
| Monthly Charges | 18000 accounts*2000 $ *7% | 2,520,000.00 |
| Total Charges | 2,709,000.00 | |
| Less: Expense | ||
| Cost of processing application | 30,000 * 20$ | 600,000.00 |
| Maintenance cost | 18000 * 10 $ | 180,000.00 |
| Loss due to charges offs | 2709000 * 5% | 135,450.00 |
| Total expenses | 915,450.00 | |
| Monthly profit | 1,793,550.00 | |
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