A company has directly placed an issue of commercial paper that has a maturity of 90 days,with a face value of $100 000 yielding 8.25% per annum.What amount would the company raise on the issue?
A) $83 096.19
B) $91 750.00
C) $97 965.75
D) $98 006.31

Question

Quizplus · Accepted Answer

In order to calculate the amount raised by the company, we need to use the following formula:

```
Amount = Face value / (1 + (rate * time/365))
```

where:
- Face value is $100 000
- Rate is 8.25% per annum or 0.0825
- Time is 90 days or 0.2466 years (90/365)

Plugging these values into the formula, we get:

```
Amount = 100000 / (1 + (0.0825 * 0.2466)) = $98 006.31
```

Therefore, the answer is D.

A Company Has Directly Placed an Issue of Commercial Paper