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    Determine Walters' Annual Financing Cost

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    Walters Manufacturing Company has been approached by a commercial paper dealer offering to sell an issue of commercial paper for the firm. The dealer indicates that Walters could sell a $5 million issue maturing in 182 days at an interest rate of 6 percent per annum (deducted in advance). The fee to the dealer for selling the issue would be $8,000.

    Determine Walters' annual financing cost of this commercial paper financing.

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    If the interest charges are deducted from the full amount of the loan, Amount = ...

    Solution Summary

    Walter's annual financing cost of commercial paper financing is determined.