The new paper would be issued every six months

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Reference no: EM132045925

The PDM co ltd needs to increase its working capital by $440 million. the following three financing alternatives are available (assume a 365-day year) i) Take cash discounts (granted on basis of 3/10, net 30) and pay on the final due date ii) Borrow $500 million from a bank at 15% compensating balance. iii) issue $470 million of six-month commercialpaper to net $440 million. Assume That the new paper would be issued every six months. (Note: commercial paper discount determines the interest cost of the issuer)

Reference no: EM132045925

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