Commonwealth Bank Agrees to Establish a Two-Year Bill Facility Using

question 52

Essay

Commonwealth Bank agrees to establish a two-year bill facility using 90-day bank bills.The face value of the facility is $10 million, and the issuer is charged an acceptance fee of 50 basis points.Calculate the net cash flows, from the issuer's perspective, occurring under the bill facility over the first 180 days.(The first parcel is issued at a market yield of 4.80% p.a., the second at 4.65% and the third at 5.00%.)

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Definitions:

Rental Income

Earnings received from renting out property or other assets.

Journal Entry

A record of financial transactions in accounting, typically consisting of a debit to one or more accounts and a credit to another, balancing out.

Liabilities

Financial obligations or debts that a company owes to others, which are expected to be paid in the future.

Journal Entry

A record of financial transactions in the double-entry bookkeeping system, indicating credits and debits in accounts.