Question
The Bodyshop has issued a bank-accepted bill to fund a short-term business project. The bill was issued for 180 days, with a face value of
The Bodyshop has issued a bank-accepted bill to fund a short-term business project. The bill was issued for 180 days, with a face value of $1 800 000 and a yield of 9.87 per cent per annum.
PART A: Calculate the amount that the Bodyshop would raise to fund the project. [2marks]
PART B:After 43 days, the bank bill is sold by the original discounter into the secondary market for $1 760 326.50. The purchaser holds the bill to maturity. Calculate the yield received by:
i.the original discounter of the bill. [2 marks]
ii.the holder of the bill at the date of maturity.[2 marks]
PART C:A company needs short-term financing pending collection of its accounts receivables but does not want to exceed its debt-to-equity ratio. In the context of accounts receivable finance, briefly explain factoring to the CFO of the company.[1 mark]
Step by Step Solution
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Step: 1
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Step: 2
Step: 3
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