Homework Help is Here – Start Your Trial Now!
Business
Finance
a. What is the total value of the five checks outstanding? b. What is the expected value of payments for the five checks outstanding? c. What is the difference between parts (a) and (b)? This represents a type of float.

a. What is the total value of the five checks outstanding? b. What is the expected value of payments for the five checks outstanding? c. What is the difference between parts (a) and (b)? This represents a type of float.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
See similar textbooks
icon
Related questions
Question
Chapter 12: Cash and Marketable Securities Management Problem 2 (Determining Float) Oscar's checkbook shows a balance of P6,000. A recent statement from the bank (received last week) shows that all checks written as of date of the statement have been paid except numbers 423 and 424, which were for P620 and P400, respectively. Since the statement date checks 425, 426, and 427 have been written for P320, P700 and P440, respectively. There is a 75 percent probability that checks 423 and 424 have been paid by this time. There is a 40 percent probability that checks 426, 426 and 427 have been paid. Required: a. What is the total value of the five checks outstanding? b. What is the expected value of payments for the five checks outstanding? c. What is the difference between parts (a) and (b)? This represents a type of float.
Transcribed Image Text:Chapter 12: Cash and Marketable Securities Management Problem 2 (Determining Float) Oscar's checkbook shows a balance of P6,000. A recent statement from the bank (received last week) shows that all checks written as of date of the statement have been paid except numbers 423 and 424, which were for P620 and P400, respectively. Since the statement date checks 425, 426, and 427 have been written for P320, P700 and P440, respectively. There is a 75 percent probability that checks 423 and 424 have been paid by this time. There is a 40 percent probability that checks 426, 426 and 427 have been paid. Required: a. What is the total value of the five checks outstanding? b. What is the expected value of payments for the five checks outstanding? c. What is the difference between parts (a) and (b)? This represents a type of float.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Float
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS