Duro Auto Parts would like to exploit a production opportunity overseas and is seeking additional capital to finance this expansion. The company plans a
commercial paper issue of $15 million on February 3 2000. The firm has never issued commercial paper before but has been assured by the investment banker
placing the issue that it will have no difficulty raising the funds and that this method of financing is the least expensive option even after the $150000
placement fee. The issue will carry a 270-day maturity and will require interest based on an annual rate of 12%. What is the effective cost of the commercial
paper issue to Duro?