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Estimate the effective cost of issuing the commercial paper

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Reference no: EM133074920

Question - Saddiq Inc. estimates that the firm has to supply inventories to its new store in Penang this year. The firm plans to sell RM5,000,000, 270-day commercial paper on which the expected discounted interest is 5% per annum to finance the supplies. The company is expected to incur flotation cost of RM7,000.

Estimate the effective cost of issuing the commercial paper.

Identify THREE (3) advantages of commercial paper.

Reference no: EM133074920

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