1. The time from acceptance to maturity on a $6,000,000 banker's acceptance is 360 days. The importing bank's acceptance commission is 2 percent and the market rate for 360-day B/As is 3 percent. If the exporter's opportunity cost of capital is 11 percent, should he discount the B/A or hold it to maturity?

2. The time from acceptance to maturity on a $6,000,000 banker's acceptance is 360 days.The importing bank's acceptance commission is 2 percent and the market rate for 360-day B/As is 3 percent. Determine the bond equivalent yield the importer's bank will earn from discounting the B/A with the exporter.

Is this correct?

Exporter holds BA to maturity= $6,000,000 - ($6,000,000 x 2/100)= $5,880,000

Exporter discounts BA= $6,000,000- ($6,000,000 x (2+3/100))= $5,700,000

Bond equiv yield= (5,880,000-5,700,000)/(5,880,000) x 360/360= 0.0306