Gale Corporation recently issued 270-day commercial paper with a face value of $100,000 and a simple interest rate of 11 percent. Assuming there are 360 days in a year, what is the commercial paper's annual percentage rate (APR)? The firm incurs no transaction costs to issue the commercial paper.

Gale Corporation recently issued 270-day commercial paper with a face value of $100,000 and a simple interest rate of 11 percent. Assuming there are 360 days in a year, what is the commercial paper's annual percentage rate (APR)? The firm incurs no transaction costs to issue the commercial paper.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 10P: The D.J. Masson Corporation needs to raise $500,000 for 1 year to supply working capital to a new...

See similar textbooks

Similar questions

Bull City Industries is considering issuing a $100,000, 7% note to a creditor on account. Assume a 360-day year. For a compound transaction, if an amount box does not require an entry, leave it blank. a. If the note is issued with a 45-day term, journalize the entries to record: the issuance of the note. the payment of the note at maturity. b. If the note is issued with a 90-day term, journalize the entries to record: the issuance of the note. the payment of the note at maturity.
Atlanta Cement, Inc. buys on terms of 2/15, net 30. It does not take discounts, and it typically pays 65 days after the invoice date. Net purchases amount to $720,000 per year. What is the nominal annual percentage cost of its non-free trade credit, based on a 365-day year? Please explain process and show calculations.
Give typing answer with explanation and conclusion YG Corporation recently issued 270-day commercial paper with a face value of $2,000,000 and a simple interest rate of 11 percent. The company paid a transaction fee equal to 0.4 percent of the issue, which was taken out of the issue amount before the company received any funds. Assuming there are 360 days in a year, what is the commercial paper's effective annual rate (rEAR)? a. 17.51% b. 11.99% c. 12.56% d. 12.63% e. 12.82%
A company has a bank loan outstanding that requires it to make annual payments of $1,000,000 at the end of each of the next three years. The bank has offered to the company to skip the next two payments and instead make a single payment at the end of the loan's term in three years' time. If the interest rate on the loan is 6% p.a., compounded quarterly, the final payment that will make the company indifferent between the two payment options is closest to: a.$2,666,283. b.$2,673,012. c.$3,183,600. d.$3,187,856.
A company has a bank loan outstanding that requires it to make annual payments of $1,000,000 at the end of each of the next three years. The bank has offered to the company to skip the next two payments and instead make a single payment at the end of the loan's term in three years' time. If the interest rate on the loan is 6% p.a., compounded quarterly, the final payment that will make the company indifferent between the two payment options is closest to: Group of answer choices A $2,666,283. B $2,673,012. C $3,183,600. D $3,187,856.
Omega Chemicals Ltd. took a $440,000 two-year note receivable from a customer in connection with a major sale transaction on 1 May 20X7. The note required annual 30 April interest payments of 3%, and the principal was due on 30 April 20X9. Omega has a 31 December year-end. (PV of $1, PVA of $1, and PVAD of $1.) Assume now that the market interest rate is 6%. Calculate the present value of the note, and prepare a schedule that shows the interest for each year of the note receivable. (Round time value factor to 5 decimal places and intermediate calculations and final answers to the nearest whole dollar amount. Enter all answers in positive.) esent val Opening Net Liability/ Receivable Closing Net Liability/ Receivable Interest Interest Paid/ Discount Expense/Revenue Received Amortization
GFB Co. buys on terms of 2/15, net 30 days. It does not take discounts, and it typically pays 30 days after the invoice date. Net purchases amount to P730,000 per year. On average, how much “free” trade credit does GFB Co. receive during the year? (Assume a 365-day year.)
Roseland Design borrowed $700,000 on a 90-day note from CorpOne Funding Company. CorpOne discounts the note at 8%. (Assume a 360-day year is used for interest calculations.) Required: 1. Journalize Roseland's entries to record: a. The issuance of the note. b. The payment of the note at maturity. If an amount box does not require an entry, leave it blank. а. b. 2. Journalize CorpOne's entries to record: a. The receipt of the note. b. The receipt of the payment of the note at maturity. If an amount box does not require an entry, leave it blank. а. b.
A firm is offered trade credit terms of 3/15, net 30 days. The firm does not take the discount, and it pays after 50 days. (Assume a 365-day year.) Questions: - How many days are there per period? - What is the effective annual cost of not taking this discount? - The number of compounding period is ___.
BMI Ltd. had arranged with the bank for a 6-month line of credit of $200,000 at prime plus 2%. Prime rate is 4%. The bank charges a commitment fee of 0.5% annually on any unused balance. BMI Ltd. ended up using only $160,000 for 4 months. 1 question what is the total interest charged? 2 question what is the total commitment fee charged?
A retailer owes a wholesaler $700,000 due in 45 days. If the payment is 15 days late, there is a 1% penalty charge. Since the bill isn't due immediately, the retailer can invest the $700,000 in a certificate of deposit and make money on the interest. The retailer has two options: a 45-day certificate of deposit (CD) earning 8% per year simple interest or a 60-day certificate earning 9% per year simple interest. How much interest would the retailer earn? Use 360 days in a year. (Round your answers to the nearest cent.) 45-day certificate $ 60-day certificate $ If the retailer opts for the 60-day certificate of deposit, he will be late on his payment to the wholesaler. How much will the penalty be if he is late on his payment to the wholesaler? $ How much will the retailer make in total if he opts for the 60-day certificate and has to pay the penalty out of the proceeds of the interest earned on the CD? (Round your answer to the nearest cent.) $ Is it better to take the 45-day…
On December 31, 2025, Nash Company signed a $1,035,300 note to Crane Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Nash's financial situation worsened. On December 31, 2027, Crane Bank determined that it was probable that the company would pay back only $621,180 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,035,300 loan. (a) Your answer is incorrect. Determine the amount of cash Nash received from the loan on December 31, 2025. (Round present value factors to 5 decimal places, e.g. 0.52513 and final answer to O decimal places, e.g. 5,275.) Amount of cash Nash received from the loan $ Prepare a note amortization schedule for Crane Bank up to December 31, 2022. (Round answers to O decimal places, eg. 5,275) Note Amortization Schedule (Before Impairment) Cash Received 128430…