1) Company A wants to raise $1,000,000 using three-month commercial paper. The net proceeds to the bank will be $956,155. What is the effective annual rate of this financing for the company?

a) Company A has issued four-month commercial paper with a $1,000,000 face value. The firm netted $972,157 on the sale. What effective annual rate is the company paying for these funds?

b) Company A has borrowed $5,378,722 for one month at a stated annual rate of 10.42%, using inventory stored in a field warehouse as collateral. The warehouser charges a $5,603 fee, payable at the end of the month. What is the effective annual rate of this loan?