Suppose an importer uses a bankers acceptance in a trade. The amount of the bankers acceptance is $1,000,000, with a bankers acceptance (B/A) rate of -0.45%. Alternatively, instead of using a bankers acceptance, the importer could use a prime-rate-based loan for the same amount. Both the loan and the bankers acceptance would have a term of one half of a year.

Complete the last row of the table, filling in the interest cost of the loan and the bankers acceptance.

	Loan	Acceptance
Amount	$1,000,000	$1,000,000
Term	0.5 Years	0.5 Years
Rate	Prime + 1.50%	B/A Rate + 1.50%
	1.05% + 1.50% = 2.55%	-0.45% + 1.50% = 1.05%
Interest Cost