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 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 ...

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

Tri- State Enterprises plans to issue commercial paper for the first time in the firms 35- year

Question:

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 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? Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...