Ultimate Industries issues commercial paper with a face value of $500,000 and a maturity of six months. Ultimate receives net proceeds of $486,000 when it sells the paper. If the prime rate is 8.5% APR compounded quarterly, how much savings in interest did Ultimate realize by accessing the commercial paper market?
A) $4,248
B) $6,874
C) $7,291
D) $12,480
Correct Answer:
Verified
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