Determine wellsley annual financing cost of this commercial

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Wellsley Manufacturing Company has been approached by a commercial paper dealer offering to sell an issue of commercial paper for the firm. The dealer indicates that Wellsley could sell a $5 million issue maturing in 182 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 $8,000.

Determine Wellsley’s annual financing cost of this commercial paper financing.

Reference no: EM131120243

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