Calculate annual effective cost

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Calculate the annual effective cost, AEC, in each of the following short-term financing alternatives: a) The terms are 2/15, net 45, if you do not take the cash discount, what is the AEC for doing so. b) A quarterly discount loan at the stated annual interest rate of 8% with quarterly compounding c) A 3-month banker's acceptance with the face value of $100,000 selling for $97,800. The bank's stampage fee will be 0.7% at the annual rate d) A $100,000, 3-day commercial paper, selling at $99,300 today and the commission paid to the dealer for its placement is 0.8% at the annual rate. The commission is to be paid upfront.

Reference no: EM132009176

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