Stella Chloe, Inc needs to borrow $2,000,000 for six months It can sell 180 day commercial paper with a face value of $2,000,000 for $1,900,000 or borrow the money from a commercial bank at 10 percent In both cases the interest is $100,000 Which loan is more expensive and why ...

Stella & Chloe, Inc. needs to borrow $2,000,000 for six months. It can sell 180-day commercial paper

Question:

Stella & Chloe, Inc. needs to borrow $2,000,000 for six months. It can sell 180-day commercial paper with a of $2,000,000 for $1,900,000 or borrow the money from a commercial bank at 10 percent. In both cases the interest is $100,000. Which loan is more expensive and why?
Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Answer rating: 82% (17 reviews)

Cost of the commercial paper 100000 x 360 105 1900000 180 Cost of the bank loa...View the full answer

Answered By

JAPHETH KOGEI

Hi there. I'm here to assist you to score the highest marks on your assignments and homework. My areas of specialisation are: Auditing, Financial Accounting, Macroeconomics, Monetary-economics, Business-administration, Advanced-accounting, Corporate Finance, Professional-accounting-ethics, Corporate governance, Financial-risk-analysis, Financial-budgeting, Corporate-social-responsibility, Statistics, Business management, logic, Critical thinking, So, I look forward to helping you solve your academic problem. I enjoy teaching and tutoring university and high school students. During my free time, I also read books on motivation, leadership, comedy, emotional intelligence, critical thinking, nature, human nature, innovation, persuasion, performance, negotiations, goals, power, time management, wealth, debates, sales, and finance. Additionally, I am a panellist on an FM radio program on Sunday mornings where we discuss current affairs. I travel three times a year either to the USA, Europe and around Africa. As a university student in the USA, I enjoyed interacting with people from different cultures and ethnic groups. Together with friends, we travelled widely in the USA and in Europe (UK, France, Denmark, Germany, Turkey, etc). So, I look forward to tutoring you. I believe that it will be exciting to meet them.

3.00+ 2+ Reviews 10+ Question Solved

Related Book For book-img-for-question

Basic Finance An Introduction to Financial Institutions Investments and Management

ISBN: 978-1111820633

10th edition

Authors: Herbert B. Mayo

See More Books

Question Posted: Mar 19, 2015 09:36 AM

See More Questions

Stella & Chloe, Inc. needs to borrow $2,000,000 for six months. It can sell 180-day commercial paper

Question:

Step by Step Answer:

Cost of the commercial paper 100000 x 360 105 1900000 180 Cost of the bank loa...View the full answer

Basic Finance An Introduction to Financial Institutions Investments and Management

Students also viewed these Accounting questions