Instruction 20.1: Use the Information to Answer Following Question(s)

Instruction 20.1:
Use the information to answer following question(s) .
Jackson Automotive Inc. of California agrees to sell specialized automotive parts to Hidatsi of Korea. Because the two companies have never done business with each other, Jackson requires a banker's acceptance as payment for the $1,000,000 order. The banker's acceptance carries a 1.4% commission per annum and payment is to be received in 6 months. If Jackson Inc. chooses to discount or sell the bankers acceptance to its bank, the discount rate is 1.00% per annum.
-Refer to Instruction 20.1. What is the size of the commission Jackson Automotive will pay the bank for the banker's acceptance?

A) $7,000
B) $5,000
C) $12,000
D) $14,000

Correct Answer:

Verified

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