QUESTION 2

Chef Rose, a cooking oil located in Shah Alam determined to expand their export to China and India. The management decided that they need an additional of RM35 million in short term funds to finance additional demand of sales for nine months of the year. The CFO of Chef Rose decided to use commercial paper offering to raise the needed fund which require 6.00% interest rate (paid in advance) plus a RM40,500 placement fee with a maturity period of nine months. Calculate the effective cost of credit.