Hatter Enterprises Has Current Assets of $15 Million and a Current

question 188

Multiple Choice

Hatter Enterprises has current assets of $15 million and a current ratio of 3. The bank has offered Hatter a $13 million revolving credit agreement at an interest rate of 10%. Hatter will have to pay a commitment fee of 1% on the unused balance. Assuming that current assets and the current ratio remain constant, calculate the total annual financing charge associated with this agreement if Hatter borrows enough to support all of its net working capital.

• A)$1,030,000
• B)$1,240,000
• C)$1,310,000
• D)$1,390,000

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Definitions:

Vascular

Pertaining to the blood vessels of the body that circulate blood, including arteries, veins, and capillaries.

Strokes

A medical condition where the blood supply to part of the brain is interrupted or reduced, causing brain tissue to be deprived of oxygen and nutrients, leading to brain damage.

Blood Vessels

Tubular structures carrying blood throughout the body, including arteries, veins, and capillaries, integral to the circulatory system.

Working Memory

A cognitive system responsible for temporarily holding information available for processing and is essential for reasoning and the guidance of decision-making and behavior.