McKenzie Wood Products Negotiated a $200,000 Revolving Line of Credit

Essay

McKenzie Wood Products negotiated a $200,000 revolving line of credit with the Bank of Montreal at prime plus 2%. On the 20^th of each month, interest is calculated (up to but not including the 20^th) and deducted from the company's chequing account. If the initial loan advance of $25,000 on July 3 was followed by a further advance of $30,000 on July 29, how much interest was charged on July 20 and August 20? The prime rate was at 3% on July 3 and fell to 2.75% on August 5.