Part A Cash Flow of Accounts Receivable Myers and Associates, a famous law office in California, bills its clients on the first of each month Clients pay in the following fashion 40 pay at the end of the first month, 30 pay at the end of the second month, 20 pay at the end of the third month, 5 pay at the end of the fourth month, and 5 default on their bills Myers wants to know the anticipated cash flow for the first quarter of 2009 if the past billings and anticipated billings follow this same pattern The actual and anticipated billings are as follows Fourth Quarter Actual Billings First Quarter Anticipated Billings Oct Nov Dec Jan Feb Mar $392,000 $323,000 $296,000 $340,000 $360,000 $408,000 Fourth Quarter Actual Billing First Quarter Anticipated Billings Oct Nov Dec Jan Feb Mar 392,000 00 323,000 00 296,000 00 340,000 00 360,000 00 408,000 00 40 30 20 5 5 156,800 00 117,600 00 78,400 00 19,600 00 19,600 00 40 30 20 5 156,800 00 96,900 00 64,600 00 16,150 00 40 30 20 118,400 00 88,800 00 59,200 00 $ 479,800 00 $ 570,400 00 $ 633,700 00 $ 533,000 00 $ 502,950 00 Anticipated cash flow for the first quarter of 2009 $ 1,669,650 00 Part B Straight Bank Loan Right Bank offers EAR loans of 9 38 and requires a monthly payment on all loans What is the APR for these monthly loans The APR is 9 00 What is the monthly payment for the following A loan of $200,000 for six years$3,605 11 monthly A loan of $450,000 for twelve years$5,121 14 monthly A loan of $1,250,000 for thirty years$10,057 78 monthly Part C Selling Bonds Astro Investment Bank has the following bond deals under way Company Bond Yield Commission Coupon Rate Maturity Gravity Belts 8 0 2 of Sale Price 8 0 10 years Invisible Rays 9 0 3 of Sale Price 12 0 10 years Solar Glasses 7 0 2 of Sale Price 5 0 20 years Space Ships 12 0 4 of Sale Price 0 20 years Determine the net proceeds of each bond and the cost of the bonds for each company in terms of yield The bond yield in the table is the market yield before the commission is charged Assume that all bonds are semiannual and issued at a par value of $1,000

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Part A: Cash Flow of Accounts Receivable Myers and Associates, a famous law office in California, bills its clients on the first of each month.

Part A: Cash Flow of Accounts Receivable

Myers and Associates, a famous law office in California, bills its clients on the first of each month. Clients pay in the following fashion: 40% pay at the end of the first month, 30% pay at the end of the second month, 20% pay at the end of the third month, 5% pay at the end of the fourth month, and 5% default on their bills. Myers wants to know the anticipated cash flow for the first quarter of 2009 if the past billings and anticipated billings follow this same pattern. The actual and anticipated billings are as follows.

Fourth Quarter Actual Billings	First Quarter Anticipated Billings
Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
$392,000	$323,000	$296,000	$340,000	$360,000	$408,000

Fourth Quarter Actual Billing	First Quarter Anticipated Billings
Oct	Nov	Dec	Jan	Feb	Mar
392,000.00	323,000.00	296,000.00	340,000.00	360,000.00	408,000.00
	40%	30%	20%	5%	5%
	156,800.00	117,600.00	78,400.00	19,600.00	19,600.00
		40%	30%	20%	5%
		156,800.00	96,900.00	64,600.00	16,150.00
			40%	30%	20%
			118,400.00	88,800.00	59,200.00
$ 479,800.00	$ 570,400.00	$ 633,700.00	$ 533,000.00	$ 502,950.00
Anticipated cash flow for the first quarter of 2009	$ 1,669,650.00

Part B: Straight Bank Loan

Right Bank offers EAR loans of 9.38% and requires a monthly payment on all loans.

What is the APR for these monthly loans?The APR is 9.00%

What is the monthly payment for the following?
1. A loan of $200,000 for six years$3,605.11 monthly
2. A loan of $450,000 for twelve years$5,121.14 monthly
3. A loan of $1,250,000 for thirty years$10,057.78 monthly

Part C: Selling Bonds

Astro Investment Bank has the following bond deals under way:

Company	Bond Yield	Commission	Coupon Rate	Maturity
Gravity Belts	8.0%	2% of Sale Price	8.0%	10 years
Invisible Rays	9.0%	3% of Sale Price	12.0%	10 years
Solar Glasses	7.0%	2% of Sale Price	5.0%	20 years
Space Ships	12.0%	4% of Sale Price	0%	20 years

Determine the net proceeds of each bond and the cost of the bonds for each company in terms of yield. The bond yield in the table is the market yield before the commission is charged. Assume that all bonds are semiannual and issued at a par value of $1,000.