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Explanation of interest and total financial cost calculation

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Walters Manufacturing Company has been approached by a commercial ppaer dealer offering to sell an issue of commerical paper for the firm. The dealer indicates that Walters could sell a $5 million dollar issue maturing in 182 days at an interest rate of 6 percent 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 paer financing.

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Solution Summary

Solution contains step-by-step details computing total interest and annual financial cost of a maturing issue.

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