roblem 4 (Determination of Optimal Average Cash Balance Using Baumol Model) avpee Inc., has two dates when it receives its cash inflows (February 15 and August 15). On each of the ates, it expects to receive P30 million. Cash expenditure are expected to be steady throughout ubsequent 6-month period. Presently, the ROI in marketable securities is 8% per annum, and the cost ansfer from securities to cash isP125 each time a transfer occurs. zequired: . What is the optimal transfer size using the Baumol model? What is the average cash balance? .What would be the answer to (a) if the ROI were 12% per annum and the transfer costs were P75? W o they differ from those in (a)?

roblem 4 (Determination of Optimal Average Cash Balance Using Baumol Model) avpee Inc., has two dates when it receives its cash inflows (February 15 and August 15). On each of the ates, it expects to receive P30 million. Cash expenditure are expected to be steady throughout ubsequent 6-month period. Presently, the ROI in marketable securities is 8% per annum, and the cost ansfer from securities to cash isP125 each time a transfer occurs. zequired: . What is the optimal transfer size using the Baumol model? What is the average cash balance? .What would be the answer to (a) if the ROI were 12% per annum and the transfer costs were P75? W o they differ from those in (a)?

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

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Here is a forecast of sales by National Bromide for the first four months of 2019 (figures in $ thousands): Month 1 Month 2 Month 3 Month 4 Cash sales 17 26 20 16 Sales on credit 120 140 110 90 On the average 52% of credit sales are paid for in the current month, 32% are paid in the next month, and the remainder are paid in the month after that. What is the expected cash inflow from operations in months 3 and 4? (Do not round intermediate calculations. Enter your answers in thousands rounded to the nearest whole number.)
The investment shown in the following figure has an annual equivalent worthof $200 at i = 8%. Determine the cash flows in periods 2, 3, 5 and 6.
The white oak company's annual sales are 219 million van average of 9 days elapses between when a customer malls its payment and when the funds become usable by the firm. a. If the company could speed up the collection of funds by 2 days, what would be the increase in the firm’s average cash balance? b. Assuming that these additional funds can be invested in the marketable securities that yield 7 percent per year, determine the increase in white Oak’s annual (pretax) earnings
Determine the present equivalent value of the cash-flow diagram of the shown figure, when the annual interest rate, ik, varies as indicated.
Smart Company is expecting temporary idle cash. Hence, it is considering investing in marketable securities. Assume that the fixed cost of selling marketable securities is P10 per transaction and the interest rate on marketable securities is 6% per year. The company estimates that it will make cash payments of P12,000,000 over a 1-month period. What is the average cash balance (rounded to the nearest peso)?
cO X HAS cASH BALANCE OF $33 AND SHORT TERM LOAN BALANCE OF $200 AT THE BEGINNING OF QTR 1. THE NET CASH INFLOW FOR THE 1ST QTR IS $89 AND THE FOR THE SECOND QTR THERE IS A NET CAHS OUTFLOW OF $44. aLL CASH SHORTFALLS ARE FUNDED WITH SHORT TERM DEBT. THE FIRM PAYS 2% OF ITS PRIOR QUARTERS ENDING LOAN BALANCE AS INTERST EACH QUARTER. THE MINIMUM CASH BALANCE IS $25. wHAT IS THE SHORT TERM LOAN BALANCE AT THE END OF THE YEAR? available anwsers are 107 111 121 128 133
The financial manager of the company SFT Inc. made the following forecasts concerning the free cash flow for years XX + 1 to XX + 4: Years Free cash flowXX+1 300 000XX+2 375 000XX+3 400 000XX+4 380 000 According to the finance manager's forecast, the company's free cash flow is expected to increase at an annual rate of 5% from year XX + 5 for the foreseeable future. Knowing that the weighted average cost of capital after tax for this company is 15%, estimate:1. The residual value of the company in year XX + 42. The overall value of the company
Veggie Burgers, Inc., would like to maintain its cash account at a minimum level of $252,000 but expects the standard deviation in net daily cash flows to be $12,700, the effective annual rate on marketable securities to be 5.4 percent per year, and the trading cost per sale or purchase of marketable securities to be $31.00 per transaction. What will be its optimal cash return point? (Use 365 days a year. Do not round intermediate calculations and round your answer to 2 decimal places.) Optimal cash return point $
Meriton Ltd expects cash flows of $13 000, $11 500, $12 750, and $9635 over the next 4 years. What is the present value of these cash flows if the appropriate discount rate is 8 per cent? A. $49990.81B. $2700.81C. $49099.81D. $39099.81
!
V company's evaluation of its cash outlay required indicates that it needs P50,000 for the year. The marketable securities earn an annual rate of 2%. The company incurs P5 to convert marketable securities to cash. V company maintains buffer cash of 5,000 all throughout the year. 1. How much is the annual holding cost as a result of keeping cash in bank? 2. How much is the total annual cost of cash?
Here is a forecast of sales by National Bromide for the first four months of 2022 (figures in $ thousands): Month 1 Month 2 Cash sales Sales on credit 16 110 25 130 Month 3 Month 4 19 100 15 80 On average, 51% of credit sales are paid for in the current month, 31% are paid in the next month, and the remainder are paid in the month after that. What is the expected cash inflow from operations in months 3 and 4? Note: Do not round intermediate calculations. Enter your answers in thousands and rounded to one decimal place. Items Month 3 Month 4 Expected Cash Inflow from Operations (in $ thousands)

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