Principles of Corporate Finance

Float Availability Float illustration - The company deposits a $100,000 check that has not yet cleared. Company’s ledger balance ...

Float Net Float illustration Net float = payment float - availability float ...

Float Net Float illustration Net float = payment float - availability float Bank’s ledger balance $1,100,000 ...

Float Net Float illustration Net float = payment float - availability float Available balance $1,000,000 + Availability float $1 ...

Managing Float w Payers attempt to create delays in the check clearing process. w Recipients attempt to remove delays in the che ...

Managing Float Check mailed ...

Managing Float Check mailed Check received Mail float ...

Managing Float Check mailed Check received Check deposited Mail float Processing float ...

Managing Float Check mailed Check received Check deposited Cash available to recipient Check charged to payer’s account Mail flo ...

Managing Float Concentration Banking - system whereby customers make payments to a regional collection center which transfers th ...

u Short Term Lending and Borrowing Principles of Corporate Finance Brealey and Myers Sixth Edition Chapter 32 ...

Topics Covered w Short-Term Lending w Money Market Instruments w Floating Rate Preferred Stock w Short Term Borrowing ...

Sources of Short Term Financing w Money Markets w Commercial paper w Secured loans w Eurodollars ...

Cost of Short-Term Loans Simple Interest Amount of loan X number of annual intperiods inerest rate the year ...

Cost of Short-Term Loans Simple Interest Effective annual rate Amount of loan X number of annual intperiods inerest rate the yea ...

Cost of Short-Term Loans Discount Interest Face value of loan X (^) ( 1 - number of quoted annperiods inual intere the yearst ra ...

Calculating Yields Example In January of 1999, 91-day T-bills were issued at a discount of 4.36%. Price of bill = 100 - 91/360 ...

Money Market Investments w US Treasury Bills w Federal Agency Securities w Short-Term Tax-Exempts w Bank Time Deposits and CDs w ...

Credit Rationing Investments Payoff Prob. of Payoff Project 1 -12^151 Project 2 -12 24 or 0 .5 or .5 Example - Henrietta Ketchup ...

Credit Rationing Expected Payoff Expected Payoff to Bank to Ms. Ketchup Project 1 110 15 Project 2 (.5x10) + (.5x0) = +5 .5 x (2 ...