Discount
Commercial Paper
This
small exercise in Matlab calculates the discount amount and net cost of
a
discount commercial paper. You must provide the future value of the
paper, the
discount rate and the number of days to maturity.
The
formulas used to calculate the discount and cost are as follows:
where:
T =
total future value
D =
discount rate
N =
number of days to maturity
We then
create a Matlab function to calculate the formulas above:
function [d1, c]
= commercial_paper(t,d,n)
d1 = t *
d/100 * n/360;
c = t -
d1;
We can create another
script to test and drive the above
m-file:
clc;
clear; close all; format bank; format compact
t =
input('Enter
future value: ');
d =
input('Enter
discount rate: ');
n =
input('Enter
number of days to maturity: ');
[d, c] =
commercial_paper(t, d, n)
Example:
SuperAcme
Corporation purchases a $625,000 comm. paper due in 60 days at 5.4%.
What's the discount and cost?
We run
our driving code and enter:
Enter
future value: 625000
Enter
discount rate: 5.4
Enter
number of days to maturity: 60
The
result is:
d = 5625.00
c = 619375.00
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