Hong Corporation issues P500,000, 20 percent, 120-day commercial paper. However, the funds are needed for only 90 days. The excess funds can be invested in securities earning 19 percent. The brokerage fee for the marketable security transaction is 1.0 percent. What is the net cost to the company for issuing the commercial paper? choose the letter of the correct answer a. P10,416.00 b. P15,416.00 c. P20,416.00 d. P25,416.00 e. P30,416.00

Hong Corporation issues P500,000, 20 percent, 120-day commercial paper. However, the funds are needed for only 90 days. The excess funds can be invested in securities earning 19 percent. The brokerage fee for the marketable security transaction is 1.0 percent. What is the net cost to the company for issuing the commercial paper? choose the letter of the correct answer a. P10,416.00 b. P15,416.00 c. P20,416.00 d. P25,416.00 e. P30,416.00

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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