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Please show all steps. Thank you. Will upvote for good content. An exporter has a $20,000 bankers' acceptance for 6 months, the acceptance fee is
Please show all steps. Thank you. Will upvote for good content.
An exporter has a $20,000 bankers' acceptance for 6 months, the acceptance fee is 2% per year, and the discount rate on this bankers' acceptance is 10% per year.
a) How much cash will the exporter receive if it sells the bankers' acceptance at a 10% discount rate?
b) The exporter's opportunity cost of funds is 10.2% 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?
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