The Super Bank wants to raise $1,000,000 using three-month commercial paper. The net proceeds to the bank will be $980,400. Mario Corporation has an issue of commercial paper with a face value of $1,000,000 and a maturity of six-months. Super received net proceeds of $967,120 when it sold the paper. Assume that the prime rate is 9% APR, compounded semi-annually. How much dollar savings in interest did Super and Mario achieve by accessing the commercial paper market?

Answer:

The effective annual rate of this financing for Super is %. (Round to two decimal places.)

The effective annual rate of the paper to Mario is %. (Round to two decimal places.)

Super saved $ . (Round to the nearest dollar.)

Mario saved $ . (Round to the nearest dollar.)