How much cash does the dealer receive how much interest, Financial Management

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How much cash does the dealer receive how much interest

A dealer repos USD 20 million Treasury Bills (T-Bills). The haircut is 5%. The parameters of the deal are as follows:

• T-Bill yield: 2%

• Maturity of T-Bills: 90 days

• Repo rate: 2.5%, term: 1 week

(a) How much cash does the dealer receive?

(b) How much interest will be paid at the end of the repo deal?

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Financial Management: How much cash does the dealer receive how much interest

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