Assume the time from acceptance to maturity on a $2,200,000 banker's acceptance is 90 days. Further assume that the importing bank's acceptance commission is 1.25 percent and that the market rate for 90-day B/As is 7 percent. Determine the amount the exporter will receive if he holds the B/A until maturity and also the amount the exporter will receive if he discounts the B/A with the importer's bank. Amount the exporter will receive at maturity Amount the exporter will receive if discounted

Assume the time from acceptance to maturity on a $2,200,000 banker's acceptance is 90 days. Further assume that the importing bank's acceptance commission is 1.25 percent and that the market rate for 90-day B/As is 7 percent. Determine the amount the exporter will receive if he holds the B/A until maturity and also the amount the exporter will receive if he discounts the B/A with the importer's bank. Amount the exporter will receive at maturity Amount the exporter will receive if discounted

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Assume the time from acceptance to maturity on a $2,200,000 banker's acceptance is 90 days. Further assume that the importing
bank's acceptance commission is 1.25 percent and that the market rate for 90-day B/As is 7 percent. Determine the amount the
exporter will receive if he holds the B/A until maturity and also the amount the exporter will receive if he discounts the B/A with the
importer's bank.
Amount the exporter will receive at maturity
Amount the exporter will receive if discounted

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