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TopFlight has a bankers acceptance drawn on Wells Fargo with a face value of $3,000,000 due in 90 days. Wells Fargo will withhold an acceptance
TopFlight has a bankers acceptance drawn on Wells Fargo with a face value of $3,000,000 due in 90 days. Wells Fargo will withhold an acceptance fee equal to 0.50% of the face value at maturity. TopFlights bank is willing to buy the bankers acceptance at a discount rate of 2.00%, compounded quarterly. What is the all-in cost of the acceptance, including the acceptance fee? (Note: Your answer should be the effective annual cost.)
A. | 5.16% | |
B. | 3.62% | |
C. | 4.08% | |
D. | 3.91% |
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