Homework Answers
Annual discount rate = 9.9%. But we need to calculate discount
rate for 182 days or six months
182 days discount rate = 9.9%/2 = 4.95%. Therefore,the discount
rate will 95.05% of the selling price.
Selling price = $50,000 × (1 - 0.0495) = $47,525
Total number of sold = $5,050,000 / $47,525 = 106 units'
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9. Commercial paper. Criss Cross Manufacturers will issue commercial paper for a short-term cash inflow. Criss...
Commercial paper. Criss-Cross Manufacturers will issue commercial paper for a short-term cash ...
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 $50000 and is selling at an annual interest rate of 8.2%, what are the proceeds from each paper; that is, what is the discount rate on the commercial paper?
Commercial paper. Criss-Cross Manufacturers will issue commercial paper for a short-term cash inflow. The paper...
Commercial paper. Criss-Cross Manufacturers will issue commercial paper for a short-term cash inflow. The paper is for 91 days and has a face value of $50,000, and the company anticipates it will sell at 96.8% of par value. Criss-Cross wants to raise $3,500,000. What is the cost of this borrowing (annual terms)? How many "papers" will it sell? What is the cost of this borrowing (three-month interest rate)?
A firm plans to issue $2,000,000 face value of commercial paper for 60 days for short-term...
A firm plans to issue $2,000,000 face value of commercial paper for 60 days for short-term cash needs. A dealer will issue the paper at $1,995,000 and will charge an upfront fee of 1% of face value. What is the effective annual rate on this paper?
Cost of commercial paper Commercial paper is usually sold at a discount. Fan Corporation has just...
Need help solving this one.
Thank you!
Cost of commercial paper Commercial paper is usually sold at a discount. Fan Corporation has just sold an issue of 92-day commercial paper with a face value of $1.2 million. The firm has received initial proceeds of $1,176,121. (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 92 days throughout the year? b. If a brokerage fee...
t The Treadwater Bank wants to raise $1,000,000 using three-month commercial for Treadwater? Magna Corporation has an issue of commercial paper with a face value of $1,000,000 and a maturity of s...
t The Treadwater Bank wants to raise $1,000,000 using three-month commercial for Treadwater? Magna Corporation has an issue of commercial paper with a face value of $1,000,000 and a maturity of six months Magna received net proceeds of $973,710 when it sold the paper what is the effective annual rate of the paper to Magna? Assume that the prime rate is 8 0% APR compounded quarterly H ν much dollar sa gs n ntres d Tr h ater and Magna...
Cost of commercial paper Commercial paper is usually sold at a discount. Fan Corporation has just...
Cost of commercial paper Commercial paper is usually sold at a discount. Fan Corporation has just sold an issue of 107-day commercial paper with a face value of $1.1 million. The firm has received initial proceeds of $1,063,129. (Note: Assume a 365-day year.) a. What effective annual rate will the firm pay for financing with commercial paper, assuming that it is rolled over every 107 days throughout the year? b. If a brokerage fee of $10,834 was paid from the...
A treasury manager is examining the potential to issue commercial paper based on the following assumptions:...
A treasury manager is examining the potential to issue commercial paper based on the following assumptions: Face Value = $25,000,000 Discount Rate = 0.75% Dealer Fee = 0.25% Commitment Fee = 0.15% Days to Maturity = 30 Based on these assumptions, what is the amount of usable funds through the commercial paper issuance? a. $24,979,166.67 b. $24,976,041.67 c. $24,984,375.00 d. $25,000,000.00
Tupelo Juniors Corporation is facing a cash crunch and needs to issue $7,500,000 in commercial paper...
Tupelo Juniors Corporation is facing a cash crunch and needs to issue $7,500,000 in commercial paper with a maturity of 45 days at a discount rate of 1%. The dealer fees on the issuance equal 0.15%. The firm will open a new committed credit line to back up the commercial paper. The commitment fee equals 0.50% on the unused line in the amount of $7,500,000. a. Calculate the amount of funds raised through the issuance. b. Calculate the dealer fee....
2) A firm is looking to raise $5,000,000 from the commercial paper (CP) market. It receives...
2) A firm is looking to raise $5,000,000 from the commercial paper (CP) market. It receives the following quotes: a. Maturity - 60-days b. Discount Rate - 0.50% c. Dealer Fee - 0.125% d. LOC Commitment Fee - 0.15% What is the effective cost of issuing this CP?
Drop-down options: (accruals, trade credit, commercial paper, bank loans) 12. Sources of short-term financing Short-term credit,...
Drop-down options: (accruals, trade credit, commercial paper,
bank loans)
12. Sources of short-term financing Short-term credit, or short-term financing, is any liability that is scheduled for repayment within one year. Among the sources of short-term funds are banks, suppliers, securities firms, and insurance companies. Their securities (or obligations) can take the form of bank loans, trade credit, commercial paper, and accruals. Some types of short-term financing are easier to obtain and manage than others. Financial managers should consider the costs...
Need help solving this one.
Thank you!
Cost of commercial paper Commercial paper is usually sold at a discount. Fan Corporation has just sold an issue of 92-day commercial paper with a face value of $1.2 million. The firm has received initial proceeds of $1,176,121. (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 92 days throughout the year? b. If a brokerage fee...
t The Treadwater Bank wants to raise $1,000,000 using three-month commercial for Treadwater? Magna Corporation has an issue of commercial paper with a face value of $1,000,000 and a maturity of six months Magna received net proceeds of $973,710 when it sold the paper what is the effective annual rate of the paper to Magna? Assume that the prime rate is 8 0% APR compounded quarterly H ν much dollar sa gs n ntres d Tr h ater and Magna...
Cost of commercial paper Commercial paper is usually sold at a discount. Fan Corporation has just sold an issue of 107-day commercial paper with a face value of $1.1 million. The firm has received initial proceeds of $1,063,129. (Note: Assume a 365-day year.) a. What effective annual rate will the firm pay for financing with commercial paper, assuming that it is rolled over every 107 days throughout the year? b. If a brokerage fee of $10,834 was paid from the...
Tupelo Juniors Corporation is facing a cash crunch and needs to issue $7,500,000 in commercial paper with a maturity of 45 days at a discount rate of 1%. The dealer fees on the issuance equal 0.15%. The firm will open a new committed credit line to back up the commercial paper. The commitment fee equals 0.50% on the unused line in the amount of $7,500,000. a. Calculate the amount of funds raised through the issuance. b. Calculate the dealer fee....
Drop-down options: (accruals, trade credit, commercial paper,
bank loans)
12. Sources of short-term financing Short-term credit, or short-term financing, is any liability that is scheduled for repayment within one year. Among the sources of short-term funds are banks, suppliers, securities firms, and insurance companies. Their securities (or obligations) can take the form of bank loans, trade credit, commercial paper, and accruals. Some types of short-term financing are easier to obtain and manage than others. Financial managers should consider the costs...
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