An exporter has just received a banker's acceptance created by an international transaction. If the banker's acceptance has a face value of $250,000 and the bank charges a commission of 1% per annum, how much will the exporter receive from the banker if the acceptance is held until maturity six months from today?

Question

Quizplus · Accepted Answer

The commission charged by the bank is 1% per annum. Since the acceptance is held until maturity six months from today, the commission charged by the bank will be half of 1%, which is 0.5%.

The commission charged by the bank is calculated as follows: 
Commission = Face value of acceptance x Rate of commission x Time 
Commission = $250,000 x 0.005 x 6/12 
Commission = $1,250

Therefore, the amount the exporter will receive from the banker at maturity is: 
Amount received = Face value of acceptance - Commission 
Amount received = $250,000 - $1,250 
Amount received = $248,750

Thus, the best choice is C.

An Exporter Has Just Received a Banker's Acceptance Created by an International