What effective annual rate will the firm pay for financing

Assignment Help Finance Basics

Reference no: EM13260057

Commercial paper is usually sold at a discount. Fan Corporation has just sold an issue of 90-day commercial paper with a face value of $1 million. The firm has received initial proceeds of $978,000 (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 90 days throughout the year.

b. If a brokerage fee of $9,612 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 90 days throughout the year?

Reference no: EM13260057

Questions Cloud

What is the cost per mile to own and operate this vehicle : The vehicle can be sold for $5,000 at the end of 6 years. If MARR is 12% per year compounded annually, what is the cost per mile to own and operate this vehicle?

Calculate the dollar cost of each of the proposed plans : Calculate the dollar cost of each of the proposed plans for obtaining an initial loan amount of $100,000.

Compute he speed of the resulting ball of clay : A 20 g ball of clay traveling east at 8.0 m/s collides and sticks togethor with a 20 g ball of clay traveling north at 8.5 m/s. What is the speed of the resulting ball of clay

What is the oscillators maximum speed : A 300 g oscillator has a speed of 95.4 cm/s when itsdisplacement is 3.0 cm, What is the oscillator's maximum speed

What effective annual rate will the firm pay for financing : What effective annual rate will the firm pay for financing with commercial paper, assuming that it is rolled over every 90 days throughout the year.

How much money will you invest in stock x and stock y? : You have $12,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 14 percent and Stock Y with an expected return of 10 percent. Assume your goal is to create a portfolio with an expected return of 12.30 percent.

What is the total work done on the crate : A factory worker pushes a 30.2kg crate a distance of 5.0m along a level floor at constant velocity by pushing downward at an angle of 30? below the horizontal. What is the total work done on the crate

What is the probability parents assisted with paying rent : What is the probability that parents provided financial assistance for their adult children by either helping buy a car or pay rent (to 2 decimals)?

Described contributed services as revenue : For one of the following situations, indicate whether the organization should recognize the described contributed services as revenue (offset by a corresponding expense). Briefly justify your response or identify key issues.

User Account

All Pages