Asian Motors Inc. plans to issue $3,000,000 of commercial paper with a 6-month maturity at 98% of par value. What is the discounted selling price of the firm's commercial paper?

Question

Quizplus · Accepted Answer

The discounted selling price of the commercial paper can be calculated using the formula:
Discounted Selling Price = Face Value x (1 - Discount Rate x Time)

Where:
Face Value = $3,000,000
Discount Rate = (100% - 98%) / 360 x 6 = 1%
Time = 6 months = 180 days

Substituting the values, we get:
Discounted Selling Price = $3,000,000 x (1 - 1% x 180) = $2,940,000

Therefore, the answer is B, $2,940,000.