Montreal Brewers is going to issue $50 million of 90-day commercial paper for net proceeds of $49 million. Montreal Brewers must maintain a $50 million credit line, on which it must pay a standby fee of 0.2 percent. What is the commercial paper’s effective annual cost?
Answer to relevant QuestionsWhat are secondary market transactions? How do secondary markets facilitate the primary markets?List the basic areas of financial management.Habitant Maple Syrup Sweets Company just issued $10 million of 180-day commercial paper for net proceeds of $9.9 million. What is the commercial paper’s quoted yield?Calculate the effective annual cost of issuing 270-day BAs at a quoted rate of 6 percent with a face value of $10 million. The bank charges a 0.4 percent stamping fee.What are some of the advantages of carrying inventories?
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