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pickupchik [31]
2 years ago
6

Clemson University Urgently needed $30 million to properly execute a student testing plan during fall of 2020. Clemson approache

d by a commercial paper dealer offering to sell an issue for Clemson. The dealer indicates that Clemson could sell a $30 million issue maturing in 270 days at an interest rate of 8. 5 percent per annum (deducted in advance). The fee to the dealer for selling the issue would be 1. 5% of the issue size. What was annual financing cost of Clemson to secure large-scale testing
Business
1 answer:
VARVARA [1.3K]2 years ago
5 0

The financing cost of Clemson to secure the investment will be $2.2875 million.

<h3>How to calculate the financing cost</h3>

From the information, we've to calculate the simple interest first. This will be:

= PRT/100

= (30 × 0.75 × 8.5)/100

= 1.9125 million

The fee is 1.25% of the issue size. This will be:

= 1.25% × $30 million

= $375000

Therefore, the financing cost will be:

= $1.9125 million + $0.375 million

= $2.2875 million

Learn more about financing cost on:

brainly.com/question/24576997

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