Suppose that the interest rate on Treasury bills is 6%, and every sale of bills costs P60.  You pay out cash at a rate of P800,000 a year.  According to Baumol's model of cash balances, what is Q?     P17,376   P20,000   P50,000   P40,000   P10,000

Q: 1. A bank deposit of P10, 000 has a real value of P12,136.30 after 3 years. What is its actual…

A: Real value after 3 years = P 12,136.30 Inflation rate = 5% Period = 3 Years

Q: 2. You need to save up for P5,500 in I year. How much should you save now if the bank offers a rate…

A: >Present value is the value of future value that can be earned today. >This can get…

Q: For what interest rate will an uniform cash flow of $30,000 per year for 20 years, (t=1 to 20) be…

A: Present value of annuity is the present value of all the stream of cash flow that occur in future.

Q: Your bank pays 5% interest annually. You have $4,500 invested in the bank. How long will it take for…

A: Future Value = Present Value * (1+rate)^n Where rate = 5% n = years Future value = 4500*2 =9000

Q: Suppose a bank has $1,000 in deposits and $100 in reserves. If the desired reserve ratio is 5…

A: Reserve ratio is the percentage of bank's deposits that must be kept in cash  as a reserve to meet…

Q: a) Why is wealth maximization considered as a better measure than profit maximization?

A: Note: As per our guidelines, we can only answer one question at once. Please post other questions in…

Q: (A) Suppose you save $4,000 per year at the beginning of each year for 10 years and earn 8.5%…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: How much money will be in the account after 7 years? £ Assuming 365 days in a financial year, how…

A: Simple interest is a simple method to figure out how much interest will accrue on a principal amount…

Q: What is the maximum amount of money created from a $3 million deposit in the banking system if the…

A: Maximum amount of money created will be Maximum amount of money = Total Deposits * 1 / Required…

Q: You have the following three quotes from three different banks. If you have USD1,000, how much can…

A: Solution:Arbitrage means earning a profit without risk and without investment.

Q: Suppose you invested $50,000 into an account at a private bank that attracts annual interest of 20%…

A: The present value of a sum shows the amount of money available today. It is the discounted value of…

Q: Suppose you put £1,000 into a bank account paying simple interest at a rate of 8% per annum. How…

A: Simple interest refers to the method of calculation of the interest earned where the principal…

Q: Assume that you currently have $52,385 in the bank. That you are going to receive $585 four times a…

A: Present Value is the current value of the future sum of money at the specific rate of return.

Q: What is the amount $R that makes the two cash-flow diagrams below equivalent? The interest rate is…

A: Present value is the current worth of a cash flow at a certain rate of interest and period of time.…

Q: Make the cash flow diagram and solve: What is the maximum amount that can be loaned at 5 percent…

A: Interest rate = 5℅ Year Payment 1 500.00 2 1000.00 3 1500.00 4 2000.00 5 2500.00

Q: Assume that you currently have $53,296 in the bank. That you are going to receive $619 yearly until…

A: Present Value is the current value of the future sum of money at the specific rate of return.

Q: A man deposited P5,000 in a bank at a rate of 10% per annum for 4months and 25days. Find the…

A: Simple interest is an interest calculated on the principal portion of a loan or original…

Q: A bank loan of P6,000,000 at 10% pa, is to be paid in 10 equal payments, the first of which to be…

A: Loan = 6,000,000 Interest rate = 10% p.a. Number of annual payments = 10 First loan payment starts…

Q: suppose the rate of $1 for yen is 83 yen, what is 2,5000,000 in dollar

A: Given amount = A = 25,000,000 YenExchange rate (Yen / $) = 83 ie. 83 Yen = 1 $We have to express A…

Q: Mama Inc. maintains a cash buffer for unexpected cash outlays for the year amounting to 3,000. Bank…

A: Cash is required in all business activities and at all levels. Therefore, cash is an inseparable…

Q: You expect to have $12,000 in one year. A bank is offering loans at 5.5% interest per year. How much…

A: We are given  Future value=12000 Rate=5.5% no. of years=1 We will calculate present value in this…

Q: required reserve ratio is 10%, how much a new $10,000 deposit can a bank lend? What is the pote

A: Introduction : In simple words, the amount of reserves that the federal authorities command the…

Q: H1. A bank bill with a face value of $250,000 was issued today and it matures in 60 days' time.…

A: Present value is referred to as the current value of the future sum of the funds/cash flows stream…

Q: ou need $10,000 in six years. Which one of the following requires the lowest investment today?…

A: The idea of the time value of money (TVM) holds that a quantity of income is valuable greater at the…

Q: Bank A pays 3% interest compounded annually on deposits, while Bank B pays 2.25% compounded daily.…

A: On any investment/deposit, the investor earns periodic interest. The act of earning interest merely…

Q: If you make yearly deposits of $1200 in a bank account, how much money will you have in your account…

A: Future value of annuity = P * [ (1+r)^n  - 1 ] /r  Where r = rate of interest i.e. 6% n = no. of…

Q: A bank with a required reserve ratio of 10%, has just sold a Treasure bond for $100.  What is the…

A: Reserve ratio is amount of deposit the banks need to held for safety of deposit.

Q: What is the present value of a perpetuity of P150,000 payable quarterly if money is 4%…

A: A perpetuity is a series of uniform cash flows over an indefinite period of time.

Q: Stella deposits $1,250 in a bank account that pays 10.5% interest compounded monthly. In 7 years,…

A: We have; Amount deposited is $1,250 Interest rate is 10.5% compounded monthly Monthly interest rate…

Q: Waleed wants to get a 5.5% of return to his investment in 1 year. In Oman, inflation is 6.74%. What…

A: Required Return on investment = 5.5% Inflation rate = 6.74% Waleed wants to get a return of 5.5% but…

Q: Your bank pays 4.1% interest annually. You have $2,700 invested in the bank. How long will it take…

A: Annual interest rate = 4.1%  Invested Bank = $2,700 = Present value The invested bank amount gets…

Q: $1,000 $1,000 2T $500 $500 2 3 4 5 6 2 3 4 5 EOY EOY 3T.

A: For calculating the value of 'T' we shall find the present value of both the cash flows and compare…

Q: Calculate profit of the bank if you know that: a. You accept deposit 2000 b. Obligatory reserve…

A: Banks are the financial institutions that accept deposits from the public to provide lending…

Q: What is the present value (today) of a infinite stream of annual cashflows that starts at $15…

A: The PV of an investment refers to the combined value of the cash flows of the investment at present…

Q: Question 1 Find the annual amount equivalent to the following cash flow. Assume 5% interest or…

A: Computation of the annual amount equivalent to the following cash flow.    Given,       Interest or…

Q: After 6 years from today, what will be the purchasing power of the money in your bank account,…

A: Present Value of Investment  Adjusted Rate of Return with regards to Inflation rate

Q: A business plans to use £20,000 of cash during the forthcoming year. It holds most of its cash in a…

A: Given the following information: Planned payments for the forthcoming time period: $20,000 Cost of…

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.