Dvds inventory storage and evaluation fee will be 1 percent


CDRW is evaluating an inventory financing arrangement with DVD banks. CDRW estimates an average monthly inventory balance of $800,000. DVD banks is offering a 12 percent APR loan on 75 percent of the value of the inventory. DVDs inventory storage and evaluation fee will be 1 percent a month on the total value of the inventory. What is the annual effective rate of the inventory loan?

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