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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.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92090243

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