问题如下:
William Jones is evaluating three possible means of borrowing $1 million for one month:
Drawing down on a line of credit at 7.2 percent with a 1/2 percent commitment fee on the full amount with no compensating balances.
A banker’s acceptance at 7.1 percent, an all-inclusive rate.
Commercial paper at 6.9 percent with a dealer’s commission of 1/4 percent and a backup line cost of 1/3 percent, both of which would be assessed on the $1 million of commercial paper issued.
Which of these forms of borrowing results in the lowest cost of credit?
选项:
A.Line of credit.
B.Banker’s acceptance.
C.Commercial paper.
解释:
B is correct.
1. Line of credit
Line cost=Net ProceedInterest+Commitment Fee×12
1,000,000(0.072×1,000,000×121)+(0.05×1,000,000×121)×12
=1,000,0006,000+416.67×12
=0.077 or 7.7%
2. Banker’s acceptance
Banker′s acceptance cost=Net ProceedInterest×12
=1,000,000−(0.071×1,000,000×121)(0.071×1,000,000×121)×12
=994,083.335916.67×12
=0.0714 or 7.14%
3. Commercial paper
Commercial paper cost=Net ProceedInterest+Dealer′s commission+Backup costs×12
=1,000,000−(0.069×1,000,000×121)(0.069×1,000,000×121)+(0.0025×1,000,000×121)+(0.003333×1,000,000×121)×12
=1,000,000−5,7505,750+208.33+277.78×12
=0.0753 or 7.53%