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Gamma, Inc. plans to sell $1 million in 270-day-maturity commercial paper on which it will pay discounted interest at an annual rate of 12%. In
Gamma, Inc. plans to sell $1 million in 270-day-maturity commercial paper on which it will pay discounted interest at an annual rate of 12%. In addition, Gamma expects to incur a cost of $1,000 in dealer placement fees and other expenses to issue the paper. What is the effective cost of the paper to Gamma? Select one: a. 12.22% b. 12.78% c. 13.20% d. 13.35%
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