Question: Tri- State Enterprises plans to issue commercial paper for the first time in the firms 35- year history. The firm plans to issue $500,000 in

Tri- State Enterprises plans to issue commercial paper for the first time in the firm’s 35- year history. The firm plans to issue $500,000 in 180- day maturity notes. The paper will carry a 10 1/ 2 percent rate with discounted interest and will cost Tri- State $ 12,000 (paid in advance) to issue.
a. What is the effective cost of credit to Tri- State?
b. What other factors should the company consider in analyzing whether to issue the commercial paper?

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a APR APR 01627 1627 Interest 01025 500000 180360 b The risk involved with the issue of commercial ... View full answer

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