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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
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Question 5

Commercial paper. Criss-Cross Manufacturers will issue commercial paper for a short-term cash inflow. Criss-Cross must raise $5,500,000, 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 8.3%, what are the proceeds from each paper; that is,
what is the discount rate on the commercial paper?
What is the discount rate on the commercial paper?
% (Round to two decimal places.)
What are the proceeds from each paper?
$ (Round to the nearest dollar.)
Transcribed Image Text:Commercial paper. Criss-Cross Manufacturers will issue commercial paper for a short-term cash inflow. Criss-Cross must raise $5,500,000, 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 8.3%, what are the proceeds from each paper; that is, what is the discount rate on the commercial paper? What is the discount rate on the commercial paper? % (Round to two decimal places.) What are the proceeds from each paper? $ (Round to the nearest dollar.)
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