(Cost of commercial paper) Tri-State Enterprises plans to issue commercial paper for the first time in the firm's 35-year history. The firm plans to issue $450,000 in 180-day maturity notes. The paper will carry a 10.00 percent rate with discounted interest and will cost Tri-State $14,000 (paid in advance) to issue. Note: Assume a 30-day month and 360-day year a. What is the effective cost of credit to Tri-State? b. What other factors should the company consider in analyzing whether to issue the commercial paper? C a. The effective cost of credit, or APR, to Tri-State is %. (Round to two decimal places.)
(Cost of commercial paper) Tri-State Enterprises plans to issue commercial paper for the first time in the firm's 35-year history. The firm plans to issue $450,000 in 180-day maturity notes. The paper will carry a 10.00 percent rate with discounted interest and will cost Tri-State $14,000 (paid in advance) to issue. Note: Assume a 30-day month and 360-day year a. What is the effective cost of credit to Tri-State? b. What other factors should the company consider in analyzing whether to issue the commercial paper? C a. The effective cost of credit, or APR, to Tri-State 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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