What is the effective annual cost of credit to stoney river

Assignment Help Finance Basics

Reference no: EM13300234

The Stoney River Pennant Company uses commercial paper to satisfy part of its short-term financing requirements. Next week, it intends to sell $50 million in 180-day maturity paper on which it expects to have to pay discounted interest at an annual rate of 19 percent per annum. In addition, Stoney River expects to incur a cost of approximately $100,000 in dealer placement fees and other expenses of issuing the paper. What is the effective annual cost of credit to Stoney River (round to the nearest .1 percent)?

a. 14.0%
b. 19.0%
c. 21.5%
d. 18.65%

Reference no: EM13300234

Questions Cloud

Which of the following is a spontaneous source of financing : Which of the following is a spontaneous source of financing?

What payments must zach taylor make to settle : What payments must Zach Taylor make to settle the loan at the interest rate of 11%, but with the 6 payments beginning on the day the loan is signed?

Measure selection on populations after exposure to pesticide : In some species of beetles, resistance to particular pesticides is a dominant trait. To measure selection on populations after exposure to pesticide, you first establish a population consisting of a mix of resistant and non-resistant individuals and ..

Which of the following actions would improve firm liquidity : Which of the following actions would improve a firm's liquidity?

What is the effective annual cost of credit to stoney river : In addition, Stoney River expects to incur a cost of approximately $100,000 in dealer placement fees and other expenses of issuing the paper. What is the effective annual cost of credit to Stoney River (round to the nearest .1 percent)?

How is the new angular velocity related to the old one : A solid disk is rotating about an axis with uniform angular velocity. another disk, with the same moment of intertia about the rotation axis, how is the new angular velocity related to the old one

Which of the following would be considered a fixed cost : Which of the following would be considered a fixed cost in a manufacturing setting?

What are the professional uses of blogs in business : Create a PowerPoint presentation that will be communicated to your manager and his fellow managers. As a group, the managers have been reviewing

Calculate the speed of the boy : A 24-kg boy stands 1 m from the center of a frictionless playground merry-go-round, which has a moment of inertia of 218 kg m2. Calculate the speed of the boy relative to the surface of the merry-go-round

User Account

All Pages