. AAC, Inc. is planning to issue $5,000,000 in 180-day maturity notes paying a rate of 12 percent per annum. The company expects to incur costs of approximately $20,000 in dealer placement fees and other expenses of issuing the commercial paper. The company plans to back up their commercial paper offering with a line of credit from a bank for $5,000,000. The compensating balance requirement is 10 percent of the line of credit. The company normally maintains $450,000 in its accounts with the bank. What is the effective cost of the commercial paper offering? (assume Commercial paper is usually issued at a discount from face value)

I know interest rate = (.12) ($5,000,000)*(180/360) but where did this 360 come from?? why is it 180/360