Cost of commercial paper

Commercial paper is usually sold at a discount. Fan Corporation has just sold an issue of 121-day

commercial paper with a face value of $1.3 million. The firm has received initial proceeds of

$ 1,273,944.

(Note:

Assume a 365-day year.)

a.What effective annual rate will the firm pay for financing with commercial paper, assuming that it is rolled over every 121 days throughout the year?

b. If a brokerage fee of $12,337