#reading-38-working-capital-management #ss-11
A company borrows $100,000 from a bank for 30 days and pays back $101,000 at the end of the tenure. The bond equivalent yield of this borrowing is:
Bond equivalent yield = holding period yield (365 / days)
Holding period yield = (end / beginning) – 1 = (101,000 / 100,00) – 1 = 1%
BEY = HPY × (365 / days) BEY = 1.00% × (365 / 30) = 12.17%
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