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Calculate the amount the exporter receive

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The time from acceptance to maturity on a $1,000,000 banker' acceptance (B/A) is 120 days. The importer's bank's acceptance commission is 1.75 percent and the market rate for 120-day B/As is 5.75 percent. What amount will the exporter receive if he/she holds the B/A until maturity? If he/she discounts the B/A with the importer's bank? Also determine the bond equivalent yield the importer's bank will earn from discounting the B/A with the exporter. If the exporter's opportunity cost of capital is 11 percent, should he/she discount the B/A or hold it to maturity?

Calculate the amount the exporter receive if he/she holds the B/A until maturity.

Reference no: EM133204929

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