Question

​(Cost of commercial paper​) ​Tri-State Enterprises plans to issue commercial paper for the first time in...

​(Cost

of commercial

paper​)

​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 270​-day maturity notes. The paper will carry a 10.50 percent rate with discounted interest and will cost​ Tri-State $11,000 ​(paid in​ advance) to issue.

Note​:

Assume a​ 30-day month and​ 360-day year.

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?  

​"The risk involved with the issue of commercial paper should be considered. This risk relates to the fact that the commercial paper market is highly impersonal and denies even the most creditworthy borrower any flexibility in terms of when repayment is made. In​ addition, commercial paper is a viable source of credit to only the most creditworthy borrowers.​ Thus, it may simply not be available to the​ firm."

Is the above statement true or​ false?

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
​(Cost of commercial paper​) ​Tri-State Enterprises plans to issue commercial paper for the first time in...
​(Cost of commercial paper​) ​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 270​-day maturity notes. The paper will carry a 10.50 percent rate with discounted interest and will cost​ Tri-State ​$11, 000 ​(paid in​ advance) to issue. Note​: Assume a​ 30-day month and​ 360-day year. a. What is the effective cost of credit to​ Tri-State? b. What other factors should the company consider in...
Find the effective annual cost (%) of a commercial paper issue. Assume a company issues $900,000...
Find the effective annual cost (%) of a commercial paper issue. Assume a company issues $900,000 commercial paper with 210-day maturity at a discount of 3.8%, the annualized dealer fee is 0.10% and the cost of backup line of credit is 0.11%
What role could the governance of ethics have played if it had been in existence in...
What role could the governance of ethics have played if it had been in existence in the organization? Assess the leadership of Enron from an ethical perspective. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among the top Fortune 500 companies, collapsed in 2001 under a mountain of debt...
Discuss ethical issues that can be identified in this case and the mode of managing ethics...
Discuss ethical issues that can be identified in this case and the mode of managing ethics Enron finds itself in this case. How would you describe the ethical culture and levels of trust at Enron? Provide reasons for your assessment. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among...
Sign In INNOVATION Deep Change: How Operational Innovation Can Transform Your Company by Michael Hammer From...
Sign In INNOVATION Deep Change: How Operational Innovation Can Transform Your Company by Michael Hammer From the April 2004 Issue Save Share 8.95 In 1991, Progressive Insurance, an automobile insurer based in Mayfield Village, Ohio, had approximately $1.3 billion in sales. By 2002, that figure had grown to $9.5 billion. What fashionable strategies did Progressive employ to achieve sevenfold growth in just over a decade? Was it positioned in a high-growth industry? Hardly. Auto insurance is a mature, 100-year-old industry...
What tools could AA leaders have used to increase their awareness of internal and external issues?...
What tools could AA leaders have used to increase their awareness of internal and external issues? ???ALASKA AIRLINES: NAVIGATING CHANGE In the autumn of 2007, Alaska Airlines executives adjourned at the end of a long and stressful day in the midst of a multi-day strategic planning session. Most headed outside to relax, unwind and enjoy a bonfire on the shore of Semiahmoo Spit, outside the meeting venue in Blaine, a seaport town in northwest Washington state. Meanwhile, several members of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT