An exporter has a $20,000 bankers’ acceptance for 6 months, the acceptance fee is 2 percent per year, and the discount rate on this bankers’ acceptance is 10 percent per year.

(a) How much cash will the exporter receive if it holds the bankers’ acceptance until maturity?

(b) How much cash will the exporter receive if it sells the bankers’ acceptance at a 10 percent discount rate?

(c) The exporter’s opportunity cost of funds is 10.2 percent per year. If the exporter wishes to maximize the present value of her bankers’ acceptance, should she discount the bankers’ acceptance or hold it until maturity?