Find the exporters true effective annual financing cost

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Reference no: EM132035348

Question

A U.S. exporter sells $50,000 of furniture to a Latin American importer. The exporter requires the importer to obtain a letter of credit.

When the bank accepts the draft the exporter discounts the 120 day note at a 6.25% discount.

What is the exporter's true effective annual financing cost?

Reference no: EM132035348

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