The effective annualized cost (%) of a bankers acceptance that has an all-inclusive annual rate of 5.25% for a one month loan of $2million is closest to?

So in the formula, you actually need to use the $2 million, which i did not think we would. Also, can someone try to explain what is going on in english? The rate they give you is for the year, but the answer wants the rate for 1 month?

Meh… lower the brain-strain. The two formulas are virtually the same, with the dealer’s commission and any backup costs being zero in the case of an acceptance. The acceptance formula is simply a shorthand version of the commercial paper formula.