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Unformatted text preview: the money for an extra 70 days. The cost of not taking the cash discount and keeping the money for 70 more days is: The cost of not taking the cash discount is less than the cost of the loan (7.183% vs. 10.312%) so the firm should not take the cash discount. e. 500,000 10.25% $51,250 Interest f. Profit on Treasury Bonds Sale price, Treasury bonds $500,000 Price price, Treasury bonds 488,000 Profit on futures contract $ 12,000 Extra interest cost $500,000 x 2% $ 10,000 The firm effectively hedged its position as the gain on the treasury bonds....
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This note was uploaded on 10/30/2010 for the course FIN 320 ASDFI taught by Professor Asdf during the Spring '09 term at University of Phoenix.
- Spring '09