The Time from Acceptance to Maturity on a $30,000,000 Banker's

question 68

Essay

The time from acceptance to maturity on a $30,000,000 banker's acceptance is 45 days.The importing bank's acceptance commission is 1.5 percent and that the market rate for 45-day B/As is 4½ percent.
Calculate the amount the banker will receive if the exporter discounts the B/A with the importer's bank.

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Definitions:

Bottom-Up Budgeting

A budgeting method where the budget is created with input from lower-level employees, leading up to a total company budget.

Extrapolation

The process of estimating, beyond the original observation range, the value of a variable on the basis of its relationship with another variable.

Previous Year's Budget

The financial plan containing income and expenditure for the prior year, used as a reference or benchmark for current financial planning.