Assume the Time from Acceptance to Maturity on a $10,000,000

question 78

Multiple Choice

Assume the time from acceptance to maturity on a $10,000,000 banker's acceptance is 90 days.Further assume that the importing bank's acceptance commission is 1 percent and that the market rate for 90-day B/As is 3.0 percent.Calculate the amount the exporter will receive if he discounts the B/A with the importer's bank.

• A)$9,993,750
• B)$9,900,000
• C)$9,975,000
• D)$9,009,375

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Definitions:

CCA Class

A categorization in Canadian tax law that determines the depreciation rate for tax purposes on capital assets.

Depreciation Tax Shield

A reduction in taxable income for a business, resulting from the depreciation expense claimed on tangible assets.

Tax Rate

The percentage of income or value that is collected by the government as tax.

MACRS Depreciation

A method of depreciation in the U.S. that allows for a faster write-off of assets under the tax code.