Databank holds ¢460million T-Bill but it needs cash to settle an investor whose investment has matured and is expected to be paid ¢400 million. You have been asked to approach Ecobank to sell the T-Bill for ¢415 million on the morning of 19th May, 2008 with agreement to repurchase the bill on the evening of 23rd May, 2008. (a) What is the cedi cost of this transaction to Databank? (b) What is the Repo Rate on this transaction?

Databank holds ¢460million T-Bill but it needs cash to settle an investor whose investment has matured and is expected to be paid ¢400 million. You have been asked to approach Ecobank to sell the T-Bill for ¢415 million on the morning of 19th May, 2008 with agreement to repurchase the bill on the evening of 23rd May, 2008. (a) What is the cedi cost of this transaction to Databank? (b) What is the Repo Rate on this transaction?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 22P

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(i) Databank holds ¢460million T-Bill but it needs cash to settle an investor whose investment has matured and is expected to be paid ¢400 million. You have been asked to approach Ecobank to sell the T-Bill for ¢415 million on the morning of 19th May, 2008 with agreement to repurchase the bill on the evening of 23rd May, 2008. What is the cedi cost of this transaction to Databank? What is the Repo Rate on this transaction?
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