8.1 Fruit of the Loom has a banker’s acceptance drawn on Banque Paribas with a face value of $10 million due in 90 days. Paribas will withhold an acceptance fee of $10,000 at maturity. Fruit of the Loom’s bank is willing to buy the acceptance at a discount rate of 6 percent compounded quarterly. a. How much will Fruit of the Loom receive if it sells the banker’s acceptance? b. What is the all-in cost of the acceptance, including Paribas’ acceptance fee?
Solution ID:10137775 | Question answered on 16-Oct-2016
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