Reference no: EM133073152

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.

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.

ii. the holder of the bill at the date of maturity.

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.