Question

A U.S. exporter sells $150,000 of furniture to a Latin American importer. The exporter requires the importer to obtain a letter of credit. When the bank accepts the draft the exporter discounts the 120-day note at a 5.25% discount. What is the exporter's true effective annual financing cost?
A. 5.52%
B. 5.42%
C. 5.34%
D. 5.29%
E. 5.25%

Answer

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