Hot Dog World is able to raise funds by issuing commercial paper with a face value of $500,000. If commercial paper is issued, the simple interest rate will be 4.5%, the time maturity woul dbe 90 days, and the compnay woul dhave tp pay a transaction fee equal to 0.75% of the issue which would be taken out of the issue amount. Compute the commercial paper's APR and rEAR.
Hot Dog World is able to raise funds by issuing commercial paper with a face value of $500,000. If commercial paper is issued, the simple interest rate will be 4.5%, the time maturity woul dbe 90 days, and the compnay woul dhave tp pay a transaction fee equal to 0.75% of the issue which would be taken out of the issue amount. Compute the commercial paper's APR and rEAR.
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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Hot Dog World is able to raise funds by issuing commercial paper with a face value of $500,000. If commercial paper is issued, the simple interest rate will be 4.5%, the time maturity woul dbe 90 days, and the compnay woul dhave tp pay a transaction fee equal to 0.75% of the issue which would be taken out of the issue amount. Compute the commercial paper's APR and rEAR.
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