Market Yield

answer in complete sentences, and be sure to use correct English spelling and grammar. Sources must be cited in APA format. Your response should be four (4) pages in length; refer to the “Assignment Format” page for specific format requirements.

Respond to the items below.

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 way:

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

5% default on their bills

The actual and anticipated billings are as follows:

Give the anticipated cash flow for the first quarter of 2018 if the past billings and anticipated billings follow this same pattern. Show your work.

Part B: Straight Bank Loan

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

a. What is the APR for these monthly loans? Show your work.

b. What is the monthly payment for the following? Show your work.

1. A loan of $200,000 for six years

2. A loan of $450,000 for twelve years

3. A loan of $1,250,000 for thirty years

Part C: Selling Bonds

Astro Investment Bank has the following bond deals under way:

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.

Determine the net proceeds of each bond and the cost of the bonds for each company in terms of yield. Show your work.