If a company sells (discounts) a bank bill with a face value of $500 000, a term to maturity of 120 days, and a yield of 8.45% per annum, how much will the company raise on the issue? (Ignore transaction fees.)Group of answer choices$445 312.02$486 485.05$486 302.48$391 295.03

To calculate the amount the company will raise on the issue, we need to use the formula for the present value of a future sum:

PV = FV / (1 + r/n)^(nt)

Where: PV = present value, or the amount the company will raise FV = future value, or the face value of the bank bill r = annual interest rate (yield) n = number of periods per year t = number of years

In this case, the yield is given annually, but the term to maturity is in days. So we need to convert the term to years and the yield to a daily

To calculate the amount the company will raise on the issue, we need to use the formula for the present value of a future sum:

PV = FV / (1 + r/n)^(nt)

Where: PV = present value, or the amount the company will raise FV = future value, or the face value of the bank bill r = annual interest rate (yield) n = number of periods per year t = number of years

In this case, the yield is given annually, but the term to maturity is in days. So we need to convert the term to years and the yield to a daily rate.

Step 1: Convert the term to years: 120 days = 120/365 = 0.328767 years

Step 2: Convert the annual yield to a daily rate: 8.45% = 0.0845 (as a decimal)

Step 3: Substitute the values into the formula:

PV = $500,000 / (1 + 0.0845/365)^(365*0.328767)

Step 4: Calculate the denominator (the part below the line in the fraction):

1 + 0.0845/365 = 1.0002315

(1.0002315)^(365*0.328767) = 1.0281

Step 5: Divide the future value by the denominator to find the present value:

$500,000 / 1.0281 =$486,302.48

So, the company will raise approximately $486,302.48 on the issue.