A firm plans to issue $2,000,000 face value of commercial paper for 60 days for short-term...
A firm plans to issue $2,000,000 face value of commercial paper for 60 days for short-term cash needs. A dealer will issue the paper at $1,995,000 and will charge an upfront fee of 1% of face value. What is the effective annual rate on this paper?
Homework Answers
Effective annual rate = (Face value - net amount realized) /net amount realized
Fee = 2,000,000 *.01 = 20,000
= (2,000,000 - (1,995,000-20,000))/ (1,995,000-20,000)
= 25,000/1,975,000
= 0.0126582278481 * 360/maturity 60 days
= 7.594%
Add Answer to:
A firm plans to issue $2,000,000 face value of commercial paper
for 60 days for short-term...
Commercial paper. Criss-Cross Manufacturers will issue commercial paper for a short-term cash inflow. The paper...
Commercial paper. Criss-Cross Manufacturers will issue commercial paper for a short-term cash inflow. The paper is for 91 days and has a face value of $50,000, and the company anticipates it will sell at 96.8% of par value. Criss-Cross wants to raise $3,500,000. What is the cost of this borrowing (annual terms)? How many "papers" will it sell? What is the cost of this borrowing (three-month interest rate)?
Commercial paper. Criss-Cross Manufacturers will issue commercial paper for a short-term cash ...
Commercial paper. Criss-Cross Manufacturers will issue commercial paper for a short-term cash inflow. Criss-Cross must raise $5,500,000, and the paper will have a maturity of 182 days. If this paper has a maturity value of $50000 and is selling at an annual interest rate of 8.2%, what are the proceeds from each paper; that is, what is the discount rate on the commercial paper?
Tupelo Juniors Corporation is facing a cash crunch and needs to issue $7,500,000 in commercial paper...
Tupelo Juniors Corporation is facing a cash crunch and needs to issue $7,500,000 in commercial paper with a maturity of 45 days at a discount rate of 1%. The dealer fees on the issuance equal 0.15%. The firm will open a new committed credit line to back up the commercial paper. The commitment fee equals 0.50% on the unused line in the amount of $7,500,000. a. Calculate the amount of funds raised through the issuance. b. Calculate the dealer fee....
Cost of commercial paper Commercial paper is usually sold at a discount. Fan Corporation has just...
Need help solving this one.
Thank you!
Cost of commercial paper Commercial paper is usually sold at a discount. Fan Corporation has just sold an issue of 92-day commercial paper with a face value of $1.2 million. The firm has received initial proceeds of $1,176,121. (Note: Assume a 365-day year) What effective annual rate will the firm pay for financing with commercial paper, assuming that it is rolled over every 92 days throughout the year? b. If a brokerage fee...
9. Commercial paper. Criss Cross Manufacturers will issue commercial paper for a short-term cash inflow. Criss...
9. Commercial paper. Criss Cross Manufacturers will issue commercial paper for a short-term cash inflow. Criss Cross must raise $5,050,000, and the paper will have a maturity of 182 days. If this paper has a maturity value of $50,000 and is selling at an annual interest rate of 9.9%. what are the proceeds from each paper, that is what is the discount rate on the commercial paper? What is the discount rate on the commercial paper? % (Round to two...
Cost of commercial paper Commercial paper is usually sold at a discount. Fan Corporation has just...
Cost of commercial paper Commercial paper is usually sold at a discount. Fan Corporation has just sold an issue of 107-day commercial paper with a face value of $1.1 million. The firm has received initial proceeds of $1,063,129. (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 107 days throughout the year? b. If a brokerage fee of $10,834 was paid from the...
A treasury manager is examining the potential to issue commercial paper based on the following assumptions:...
A treasury manager is examining the potential to issue commercial paper based on the following assumptions: Face Value = $25,000,000 Discount Rate = 0.75% Dealer Fee = 0.25% Commitment Fee = 0.15% Days to Maturity = 30 Based on these assumptions, what is the amount of usable funds through the commercial paper issuance? a. $24,979,166.67 b. $24,976,041.67 c. $24,984,375.00 d. $25,000,000.00
A Firm plans to issue 90 day commercial paper with a par value of $5,000,000.00. It...
A Firm plans to issue 90 day commercial paper with a par value of $5,000,000.00. It expects to sell the commercial paper for $4,850,000.00 the yield it expects to pay investors is estimated to be
(Cost of commercial paper) Tri-State Enterprises plans to issue commercial paper for the first time in...
(Cost of commercial paper) Tri-State Enterprises plans to issue commercial paper for the first time in the firm's 35-year history. The firm plans to issue $550,000 in 270-day maturity notes. The paper will carry a 10.75 percent rate with discounted interest and will cost Tri-State $10,000 (paid in advance) to issue. Note: Assume a 30-day month and 360-day year. a. What is the effective cost of credit to Tri-State? b. What other factors should the company consider in analyzing whether...
2) A firm is looking to raise $5,000,000 from the commercial paper (CP) market. It receives...
2) A firm is looking to raise $5,000,000 from the commercial paper (CP) market. It receives the following quotes: a. Maturity - 60-days b. Discount Rate - 0.50% c. Dealer Fee - 0.125% d. LOC Commitment Fee - 0.15% What is the effective cost of issuing this CP?
Tupelo Juniors Corporation is facing a cash crunch and needs to issue $7,500,000 in commercial paper with a maturity of 45 days at a discount rate of 1%. The dealer fees on the issuance equal 0.15%. The firm will open a new committed credit line to back up the commercial paper. The commitment fee equals 0.50% on the unused line in the amount of $7,500,000. a. Calculate the amount of funds raised through the issuance. b. Calculate the dealer fee....
Need help solving this one.
Thank you!
Cost of commercial paper Commercial paper is usually sold at a discount. Fan Corporation has just sold an issue of 92-day commercial paper with a face value of $1.2 million. The firm has received initial proceeds of $1,176,121. (Note: Assume a 365-day year) What effective annual rate will the firm pay for financing with commercial paper, assuming that it is rolled over every 92 days throughout the year? b. If a brokerage fee...
9. Commercial paper. Criss Cross Manufacturers will issue commercial paper for a short-term cash inflow. Criss Cross must raise $5,050,000, and the paper will have a maturity of 182 days. If this paper has a maturity value of $50,000 and is selling at an annual interest rate of 9.9%. what are the proceeds from each paper, that is what is the discount rate on the commercial paper? What is the discount rate on the commercial paper? % (Round to two...
Cost of commercial paper Commercial paper is usually sold at a discount. Fan Corporation has just sold an issue of 107-day commercial paper with a face value of $1.1 million. The firm has received initial proceeds of $1,063,129. (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 107 days throughout the year? b. If a brokerage fee of $10,834 was paid from the...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 10 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 10 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 10 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 10 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 10 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 10 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 10 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 10 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 10 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 10 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 10 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 10 months ago