Danial company plans to sell RM400,000 in 90-days maturity paper on which the expected discounted interest to be paid 10 percent per annum. The dealer placement fee is RM3,000 per paper, and the par value of these commercial papers is RM40,000 each. Calculate the cost of issuing commercial paper. Answer 44.44 percent 4,44 percent 10.19 percent 11.11 percent

Danial company plans to sell RM400,000 in 90-days maturity paper on which the expected discounted interest to be paid 10 percent per annum. The dealer placement fee is RM3,000 per paper, and the par value of these commercial papers is RM40,000 each. Calculate the cost of issuing commercial paper. Answer 44.44 percent 4,44 percent 10.19 percent 11.11 percent

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 22P

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6. The price of a 270-day commercial paper is $7,937. If the annualized yield is 5.30%, what will the paper pay at maturity? A. $8,358 B. $7,640 C. $7,538 D. $8,246
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Illustration: A company sells $50,000 of goods with the terms net/30. The receivable is immediately factored with a 3% factor fee, 10% interest, and a reserve of 8%. How much does the selling firm immediately receive from the factor?
(i) You have just been offered a commercial paper with a face value of ¢92,000,000 which bears a discount of 25% and has 91 days to mature. (a) What is the cedi discount on the paper? (b) How much will you be prepared to pay for this paper?
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