Yunes Yearlings (YY) is able to raise funds by issuing commercial paper with a face value of

Question:

Yunes’ Yearlings (YY) is able to raise funds by issuing commercial paper with a face value of $100,000. If commercial paper is issued, the simple interest rate would be 5 percent, the time to maturity would be 90 days, and YY would have to pay a transaction fee equal to 0.25 percent of the issue, which would be taken out of the issue amount. Compute the commercial paper’s APR and r_EAR.

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... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...

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