Colson Company has a line of credit with Federal Bank. Colson can borrow up to $ at any time over the course of the calendar
year. The following table shows the prime rate expressed as an annual percentage along with the amounts borrowed and repaid
during the first four months of the year. Colson agreed to pay interest at an annual rate equal to percent above the bank's prime
rate. Funds are borrowed or repaid on the first day of each month. Interest is payable in cash on the last day of the month. The interest
rate is applied to the outstanding monthly balance. For example, Colson pays percent percent percent annual
interest on $ for the month of January.
Required
a Compute the amount of interest that Colson will pay on the line of credit for the first four months of the year.
b Compute the amount of Colson's liability at the end of each of the first four months.
Complete this question by entering your answers in the tabs below.
Required
Compute the amount of interest that Colson will pay on the line of credit for the first four months of the year. Round your
answers to the nearest whole dollar.
