Question

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 8 months, how much will the company owe at the end of one year? At the end of the year, the company will owe $

Answer 1

please find below answer..

This question is in two part. We have to compute future value at the end of 8th month and than 12th month
monthly interest rate for 8 month =				=12%/12	1.00%
monthly interest rate after 8 month =				=15%/12	1.25%
Computation of amount company will owe =					=300000*(1+1%)^8*(1+1.25%)^4
					341,406.96
therefore end of the year company will own=					341,406.96