Question

^{A $3,500,000 banker's acceptance has 90 days to maturity. The market rate for 90-day B/As is 5.0%. The importer’s bank charges a 1.25% acceptance commission. How much will the exporter will receive if the B/A is discounted with the importer's bank.}

<sup>a)$3,445,312.50

b)$3,000,000.00

c)$2,945,625.00

d)$2,890,725.25
e) None of the options.</sup>

Answer 1

Answer :

If the exporter discounts the Bills Acceptance ( B / A) with the importer's bank he will receive as

= $ 3,500,000 - [ $ 3,500,000 * ( 0.0125 + 0.05 ) * 90 / 360 ]

= $ 3,500,000 - $ 54,687.5

= $ 3,445,312.50

Therefore, the answer is option (a) i.e., $ 3,445,312.50