Commercial paper short term finance

An example of commercial paper is when a retail firm is looking for short-term funding to finance some new inventory for an upcoming holiday season. The firm needs $10 million and it offers investors $ million in face value of commercial paper in exchange for $10 million in cash, according to prevailing interest rates. In effect, there would be a $ million interest payment upon maturity of the commercial paper in exchange for the $10 million in cash, equating to an interest rate of 1%. This interest rate can be adjusted for time, contingent on the number of days the commercial paper is outstanding.

Commercial paper short term finance

commercial paper short term finance

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commercial paper short term financecommercial paper short term financecommercial paper short term financecommercial paper short term finance