PQR Ltd. issues commercial paper for ₹ 3 crore on 90 days maturity in December at an interest rate of 11.50 p.a. Calculate the net amount received by the company on issue of commercial paper of ₹ 3 crore ?

CS Professional · Financial, Treasury and Forex Management · PYQS · December 2017
PQR Ltd. issues commercial paper for ₹ 3 crore on 90 days maturity in December at an interest rate of 11.50 p.a. Calculate the net amount received by the company on issue of commercial paper of ₹ 3 crore ?

Answer & Explanation:

Interest calculation Interest rate = 11.50% p.a. Therefore interest rate for 90 days = 11.50 × 90 ⁄ 365 = 2.836% Interest received on commercial paper will be: = 2.836/(100+2.836) × ₹ 3 crores = ₹ 8,27,337 Therefore net amount received at the time of issue = ₹ 3 crore - ₹ 8,27,337 = ₹ 2,91,72,663

Topics: Short-term Financing

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