Q1 ) a ) P PS "= 3. 51 99000 P =3:516. . 100000 yolads ( days) 98300 74 180 Purchase Yield = 100000 - 98300 * 365 98 300 180 = 0 .03507 = 3.507% . = 3 . 5 1 % Sale Yield = 99000 - 98300 365 9 8300 74 0 . 0 35 12 I 3 . 5. 12 ,/ =3.5 1% The lower yield will cause a higher price for George since there's on inverse relationship between sale yieds and bank bill prices . If George accepts the lower yield the the selling price will be between $ 100,000 and $99, 000 but more than $99, 000 on the 74 th day . Sale Price of Bank - bill = $ 99 , 000 :00 Purchase Price of Bah-Bill= 98, 36 0 . 00 Interest for 74 day period 698.89 " Gan / Loss on Investment : Interest = 1700 * 74 180 = $698-89 Scanned with CamScanner wooH ~LisA v . RS 2 We assume that Yolanda borrowed to purchase the band the The break- ever rate of interest on borrowing is 3.51% If the borrowing cost is greater than break-even point plus 10 basis points , Yolanda will end up with a . 3 61% ) Cash Surplus / Deficit (100000 * 3.61% * 365/ 189 - 100000 - 98 300)) = $ 80 . 27 39 7 $ 80 . 27 Cash Deficit 5.4 A - ( = 125 7.p.4 Max (150 ( days ) 125000 80000 Real Cost of Borrowing if fees and charges are paid on the date of issue ( 10 000 - 10 000 x 5.4% x 130)+25000 = $ 9733. 70 + $25000 $ 34, 733 . 70 Real Cost of Borrowing = (10 000 x 5. 4%x 365 365 34 73-3 . 70 X 100 x 180 = 1 .55 47 % = 1.551 # Scanned with CamScanner es 3 Real Cost of Borrowing if fees and changes are paid at maturity . = $9733 . 70 + 25000 - (10000 - 9733.70) = $ 34, 467.40 . '. Real Cost of borrowing = 10 00 0 * 5.4% x 365 X 100 x 365 180 34 4 67 . 40 = 1 . 5667 % 1. 57 %