Question: Assume Nikken Microsystems has sold Internet servers to Telecom Espaa for 700,000. Payment is due in 3 months and will be made with a trade

Assume Nikken Microsystems has sold Internet servers to Telecom España for €700,000. Payment is due in 3 months and will be made with a trade acceptance from Telecom España Acceptance. The acceptance fee is 1.0% per annum of the face amount of the note. This acceptance will be sold at a 4% per annum discount. What is the annualized percentage all-in-cost in euros of this method of trade financing?

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Assumptions Values Face amount of sale 700000 Maturity days 90 Trade acceptance fee per annum 100... View full answer

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