Quincy Fathows & Co.plans to issue commercial paper for the first time in its 85-year history.The firm plans to issue $400,000 in 120-day maturity notes.The paper will carry a 13% quarterly compounded rate with discounted interest and will cost Quincy Fathows $8,000 in advance to issue.
a.What is the effective cost of credit to Quincy Fathows?
b.What other factors should the firm consider in analyzing whether or not to issue the commercial paper?
Correct Answer:
Verified
RATE =
× RATE =
× = .203 = 20.3%...View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q141: Which of the following statements about factoring
Q142: The Smith Corporation is a maker of
Q143: Your company needs to pay $10,000 for
Q144: The effective interest rate on short-term loans
Q145: All of the following are true EXCEPT
A)
Q147: The primary advantage that pledging accounts receivable
Q148: Calculate the effective cost of the following
Q149: The effective annual cost of not taking
Q150: A floating lien,chattel mortgage,or terminal warehouse receipt
Q151: Nike Corp.buys on 3/10,net 30 days.What is
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents