Firms annualized cost of funds


Problem:

MZC Ltd draws $2,000,000 in 180-day BABs at the current market rate of 7.0% p.a. What proceeds will the firm receive from discounting the bill if the bank charges an acceptance fee of 1.5%? What is the firm's annualized cost of funds taking the acceptance fee into account? With all calculations.

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Finance Basics: Firms annualized cost of funds
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