Stellar Shoes would like to maintain their cash account at a minimum level of $25,000, but expects the standard deviation in net daily cash flows to t $2,000; the effective annual rate on marketable securities to be 5 percent per year, and the trading cost per sale or purchase of marketable securitie be $100 per transaction. What will be their optimal upper cash limit? Multiple Choice $114,277.02 $38,092.34 $27,000

Stellar Shoes would like to maintain their cash account at a minimum level of $25,000, but expects the standard deviation in net daily cash flows to t $2,000; the effective annual rate on marketable securities to be 5 percent per year, and the trading cost per sale or purchase of marketable securitie be $100 per transaction. What will be their optimal upper cash limit? Multiple Choice $114,277.02 $38,092.34 $27,000

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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You have the following cash flows for the firm; What is NPV, if discount rate is 10% ? CF0 = -467 (CF0 is always negative. It is your initial investment) CF1 = 625 CF2 = 684 CF3 = 666 CF4 = 753 CF5 = 976
Please solve using excel and explain formulas.
You have the following cash flows for the firm; What is NPV, if discount rate is 10% ? CF0 = -467 (CF0 is always negative. It is your initial investment) CF1 = 625 CF2 = 684 CF3 = 666 CF4 = 753 CF5 = 976
Use the ERR method with = 10% per year to solve for a unique rate of return for the following cashflow diagram. How many IRRS (the maximum) are suggested by Descartes' rule of signs? The ERR is%. (Round to two decimal places.) A maximum of 0 $45 IRR value(s) is(are) suggested by the Descartes' rule of signs. $220 1 2 $350 Enf of Year $190 MARR = 10%/yr
dev
F2 Penco Supply spends £428,000 a week to pay bills and maintains a lower cash balance limit of £75,000. The standard deviation of its disbursements is £18,900. The applicable interest rate is 5 per cent and the fixed cost of transferring funds is £65. What is the firm's optimal initial cash balance based on the BAT model?
2. Your company is evaluating a switch from a cash policy to a net 30 policy. The price per unit is $49, and the variable cost per unit is $20. The company currently sells 100 units per month. Under the proposed policy, the company expects to sell 110 units per month. The required monthly return is 2%. a) What is the NPV of the switch? Part 1: Incremental cash flow = (P – V)(S' – 5) Incremental cash flow = ($49 – $20)($110 – 100) Incremental cash flow = $29 * $10 = $290 t 2: Incremental cash flow Cost of capital Incremental cash flow Incremental cash flow =02 $290 = $14500 Part 3: Switch Cost = (P + S) + V(S' – 5) Switch cost = ($49 + 100) + $20($110 – $100) Switch cost = $4900 + $200 = $5100 Therefore: NPV of Switch = $14500 – $5100 = $9400
Problem 10-1 Zenith Investment Company is considering the purchase of an office property. It has done an extensive market analysis and has estimated that based on current market supply or demand relationships, rents, and its estimate of operating expenses, annual NOI will be as follows: Year NOI 1 $ 1,285,000 2 1,285,000 3 1,285,000 4 1,295,000 5 1,345,000 6 1,395,000 7 1,434,000 8 1,474,170 A market that is currently oversupplied is expected to result in cash flows remaining flat for the next three years at $1,285,000. During years 4, 5, and 6, market rents are expected to be higher. It is further expected that beginning in year 7 and every year thereafter, NOI will tend to reflect a stable, balanced market should grow at 3 percent per year indefinitely. Zenith believes that investors should earn a 12 percent return (r) on an investment of this kind. ?
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
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You have the following cash flows for the firm; What is NPV, if discount rate is 10% ? CF0 = -477 (CF0 is always negative. It is your initial investment) CF1 = 710 CF2 = 699 CF3 = 752 CF4 = 734 CF5 = 937
Skysong, Inc. is using a discounted cash flow model. Scenario 1: Cash flows are fairly certain $180/year for 5 years Risk-adjusted discount rate is 6% Risk-free discount rate is 4% Identify which model Skysong might use to estimate the discounted fair value under each scenario, and calculate the fair value. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answers to 2 decimal places, e.g. 5,275.25.) Click here to view the factor table PRESENT VALUE OF 1 Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Scenario 1. Skysong might use Fair Value Scenario 2: Skysong might use Fair Value $ Scenario 2: Cash flows are uncertain 75% probability that cash flows will be $180 in 5 years 25% probability that cash flows will be $95 in 5 years Risk-adjusted discount rate is 6% Risk-free discount rate is 4% $ traditional approach ✓ model. expected cash flow model.

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