Tupelo Juniors Corporation is facing a cash crunch and needs to issue $7,500,000 in commercial paper with a maturity of 45 days at a discount rate of 1%. The dealer fees on the issuance equal 0.15%. The firm will open a new committed credit line to back up the commercial paper. The commitment fee equals 0.50% on the unused line in the amount of $7,500,000.
a. Calculate the amount of funds raised through the issuance.
b. Calculate the dealer fee.
c. Calculate the commitment fee
d. Calculate the effective cost.