If a firm were to issue $5 million of commercial paper with a maturity of six months at an interest rate of 10%, the paper would sell at issue date for:

A) $5,000,000.
B) $4,500,000.
C) $4,761,905.
D) $4,750,000.

Commercial Paper

Corporations issue this unsecured, short-term financial instrument to cover expenses related to payroll, accounts payable, and inventories.

Maturity

The time at which the principal or final payment of a financial instrument, such as a bond or loan, is due to be paid in full.

Interest Rate

The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal, typically on an annual basis.