A company is considering raising of `50 crore by issuing CPs for 90 days. CPs will be sold at a discount of 10 per cent. Stamp duty charges will be 0.5 per cent of the size of the issue. The issuing and other charges will amount to `2.50 lakh and rating charges to 0.40 per cent of the issue size. Calculate the effective cost of CP.

A company is considering raising of `50 crore by issuing CPs for 90 days. CPs will be sold at a discount of 10 per cent. Stamp duty charges will be 0.5 per cent of the size of the issue. The issuing and other charges will amount to `2.50 lakh and rating charges to 0.40 per cent of the issue size. Calculate the effective cost of CP.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 33P

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