Question

A Commercial Bill Facility of $200,000 was provided over 180 days.

The first bill was drawn at 5%pa , with 6%pa and 7%pa applying to the next two rollovers.

Mercantile Bank charged an Acceptance Fee of 2%.

Calculate:

[ Select ] Net Cash Flow at Day 0

[ Select ] Net Cash Flow at Day 60

[ Select ] Net Cash Flow at Day 120

[ Select ] Net Cash Flow at Day 180

All correct to TWO decimal places and you MUST INCLUDE CASHFLOW DIRECTION.

Can you give me a detailed calculation process?

Answer 1

Roll over of loan means loan is accepted again with a small acceptance fee

the given loan was rolled over at 60 and 120 days different interest rates are applicable at different time periods

net cash flow at year 0

loan (200000)

less acceptance fee=200000*2%=4000

net cash flow is (196000)

At period 60 cash flow will be interest for 0-60 and roll over fee which is nothing but acceptance fee

=acceptance fee of 4000 and interest of 200000*5%*60/365=1644

=5644

net cash flow at period 120

loan (200000)

less acceptance fee=200000*2%=4000

net cash flow is (196000)

At period 120 cash flow will be interest for 60-120 and roll over fee which is nothing but acceptance fee

=acceptance fee of 4000 and interest of 200000*6%*60/365=1972

=5972

cash flow at period 180 will be loan amount plus interest

loan of 200000 plus interest 200000*7%*60/365= 2301

total cash flow at period 180=202301