Question

A Chinese exporter sells $200,000 of toys to a French importer. The Chinese exporter requires the French importer to obtain a letter of credit. When the bank accepts the draft the exporter discounts the 90-day note at a 4% discount. What is the exporter's true effective annual financing cost?
A. 4.00%
B. 4.04%
C. 4.10%
D. 4.16%
E. 4.22%

Answer

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