Pembina Properties Issues Commercial Paper with a Face Value of $450,000

question 105

Multiple Choice

Pembina Properties issues commercial paper with a face value of $450,000 and a maturity of three months.The firm receives $442,000 when it sells the paper.If the prime rate is 9% APR compounded quarterly,how much interest savings did Pembina realize by using commercial paper?

• A)$1,945
• B)$9,945
• C)$8,000
• D)$31,780
• E)$1,625

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