Question: Cereal City Instruments will issue commercial paper for a short term
Cereal City Instruments will issue commercial paper for a short-term cash inflow. The paper is for 182 days, has a face value of $50,000, and is anticipated to sell at 94% of par value. Cereal City wants to raise $5,000,000, so what is the cost of this borrowing (annual terms) and how many “papers” will be sold?
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