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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...
19) Data Back-Up Systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 12%, payable at maturity. (Note: Assume a 365-day year.) a.How much interest (in dollars) will the firm pay on the 90-day loan? b.Find the 90-day rate on the loan c.Annualize your result in part b to find the effective annual rate for this loan, assuming that it is rolled over every 90 days throughout the year under the same terms and circumstances.
180-day commercial paper can be bought at a 6.60 percent discount yield. What are the bond equivalent yield (BEY) and the effective annual rate (EAR) on the commercial paper? (Use 365 days in a year. Do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 2.161))
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) Tri-State Enterprises plans to issue commercial paper for the first time in the firm's 35-year history. The firm plans to issue $550,000 in 270-day maturity notes. The paper will carry a 10.75 percent rate with discounted interest and will cost Tri-State $10,000 (paid in advance) to issue. Note: Assume a 30-day month and 360-day year. a. What is the effective cost of credit to Tri-State? b. What other factors should the company consider in analyzing whether...
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...
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....
Lett's commercial paper is presently selling at a discount. It sells for 98.19 of par and matures in 100 days. (Use 365 days o year. Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. Calculate its yield as quoted in the market Yield 6.73 % b. Calculate its effective annual yield Effective annual yield %
Lett's commercial paper is presently selling at a discount. It sells for 98.35 of par and matures in 120 days. (Use 365 days a year. Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. Calculate its yield as quoted in the market. Yield % b. Calculate its effective annual yield Effective annual yield 0 %
Q. 05: The Treadwater Bank wants to raise $1.1 million using three-month commercial paper. The net proceeds to the bank will be $1,084,600. What is the effective annual rate of this financing for Treadwater? Solution: Q. 06: The Needy Corporation borrowed $14,000 from Bank Ease. According to the terms of the loan, Needy must pay the bank $488 in interest every three months for the three-year life of the loan, with the principal to be repaid at the maturity of...