A drug store (pharmacy) chain wants to raise $500,000 using two-month commercial paper. The net proceeds...

 

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A drug store (pharmacy) chain wants to raise $500,000 using two-month commercial paper. The net proceeds to the chain will be $497,500. What is the effective annual rate of this financing? Given what you have calculated, suggest a cheaper source of financing. A drug store (pharmacy) chain wants to raise $500,000 using two-month commercial paper. The net proceeds to the chain will be $497,500. What is the effective annual rate of this financing? Given what you have calculated, suggest a cheaper source of financing.

Answer rating: 100% (QA)

To calculate the effective annual rate EAR of the financing we need to consider the net proceeds and ... View the full answer