days. If this paper has a maturity value of $50,000 and is selling at an annual interest rate of 9.1%, what are the p unt rate on the commercial paper?
days. If this paper has a maturity value of $50,000 and is selling at an annual interest rate of 9.1%, what are the p unt rate on the commercial paper?
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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Question 11

Transcribed Image Text:Commercial paper. Criss-Cross Manufacturers will issue commercial paper for a short-term cash inflow. Criss-Cross must raise $6,000,000, and the paper will have
a maturity of 182 days. If this paper has a maturity value of $50,000 and is selling at an annual interest rate of 9.1%, what are the proceeds from each paper; that is,
what is the discount rate on the commercial paper?
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