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Round the answers two decimal places
Cost of commercial paper
Commercial paper is usually sold at a discount. Fan Corporation has just sold an issue of 118?-day commercial paper with a face value of ?$1.3 million. The firm has received initial proceeds of ?$1,281,814.
(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 118 days throughout the? year?
b. If a brokerage fee of ?$12,550 was paid from the initial proceeds to an investment banker for selling the? issue, what effective annual rate will the firm? pay, assuming that the paper is rolled over every 118 days throughout the? year?
Caballos, Inc., has a debt to capital ratio of 27%, a beta of 1.3 and a pre-tax cost of debt of 5.7%. The firm had earnings before interest and taxes of $ 630 million for the last fiscal year, after depreciation charges of $ 234 million. Assume that ..
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Two stocks (Stock J and Stock K) have the same current stock price, and the same standard deviation. There exists a call option on 100 shares of Stock J, a call option on 100 shares of Stock K, and a call option on a portfolio of 50 shares of J and 5..
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