Cost of commercial paper Commercial paper is usually sold at a discount. Fan Corporation has just sold an issue of 82-day commercial paper with a face value of $0.5million. The firm has received initial proceeds of $487,649. (Note: Assume a 365-day year.) What effective annual rate will the firm pay for financing with commercial paper, assuming that it is rolled over every year? а. 82 days throughout the b. If a brokerage fee of $4,662 was paid from the initial proceeds to an investment banker for selling the issue, what effective annual rate will the firm pay, assuming that the paper is rolled over every 82 days throughout theyear?

Cost of commercial paper Commercial paper is usually sold at a discount. Fan Corporation has just sold an issue of 82-day commercial paper with a face value of $0.5million. The firm has received initial proceeds of $487,649. (Note: Assume a 365-day year.) What effective annual rate will the firm pay for financing with commercial paper, assuming that it is rolled over every year? а. 82 days throughout the b. If a brokerage fee of $4,662 was paid from the initial proceeds to an investment banker for selling the issue, what effective annual rate will the firm pay, assuming that the paper is rolled over every 82 days throughout theyear?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 22P

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