Cost of commercial paper Better Effort Corporation sold an issue of 106-day commercial paper with a face value of $1.3 million. The firm has received initial proceeds of $1,285,230. (Note: Assume a 365-day year.) a. What effective annual rate will the firm pay for financing with commercial paper, assuming that it is rolled over every 106 days throughout the year? . If a brokerage fee of $12,260 was paid from the initial proceeds to an investment banker for selling the issue, what effective annual rate will the firm pay, assuming that the paper is rolled over every 106 days throughout the year? a. The effective annual rate the firm will pay for financing with commercial paper, assuming that it is rolled over every 106 days throughout the year, is%. (Round to two decimal places.)
Cost of commercial paper Better Effort Corporation sold an issue of 106-day commercial paper with a face value of $1.3 million. The firm has received initial proceeds of $1,285,230. (Note: Assume a 365-day year.) a. What effective annual rate will the firm pay for financing with commercial paper, assuming that it is rolled over every 106 days throughout the year? . If a brokerage fee of $12,260 was paid from the initial proceeds to an investment banker for selling the issue, what effective annual rate will the firm pay, assuming that the paper is rolled over every 106 days throughout the year? a. The effective annual rate the firm will pay for financing with commercial paper, assuming that it is rolled over every 106 days throughout the year, is%. (Round to two decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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b. The effective annual rate the firm will pay with the brokerage fee, assuming that the paper is rolled over every 106 days throughout the year, is
(Round to two decimal places.)
Transcribed Image Text:Cost of commercial paper Better Effort Corporation sold an issue of 106-day commercial paper with a face value of $1.3 million. The firm has received initial proceeds of $1,285,230. (Note: Assume a 365-day year.)
a. What effective annual rate will the firm pay for financing with commercial paper, assuming that it is rolled over every 106 days throughout the year?
b. If a brokerage fee of $12,260 was paid from the initial proceeds to an investment banker for selling the issue, what effective annual rate will the firm pay, assuming that the paper rolled over every 106 days throughout the year?
a. The effective annual rate the firm will pay for financing with commercial paper, assuming that it is rolled over every 106 days throughout the year, is%. (Round to two decimal places.)
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