Question
A company wants to raise funds by issuing a 180-day $1, 000, 000 bank bill on 1 January 2017 at a yield rate of 6.45%
A company wants to raise funds by issuing a 180-day $1, 000, 000 bank bill on 1 January 2017 at a yield rate of 6.45% p.a. (simple interest rate). The company incurs fees and charges amounting to $12,000. a. Find the real cost (as a rate of simple interest % p.a., rounded to 2 decimal places) of raising the funds, allowing for the fees and charges payable at maturity. b. Find the real cost (as a rate of simple interest % p.a., rounded to 2 decimal places) of raising the funds, allowing for the fees and charges payable at issuing. c. An investor John has purchased this bank bill on 1 January 2017 at the yield rate of 6.45% p.a.and sold it on 12 March 2017 at the yield rate of 6.2% p.a. What is his sale price (rounded to two decimal places)? d. Draw a carefully labelled cash flow diagram to represent the above financial transaction. Draw your cash flow diagram from John's perspective.
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